AMD 10-Q 2026-09-26 section summaries

AMD — Q3 and 9M FY2026

For the quarter ended September 26, 2026, AMD’s revenue and earnings grew substantially, led by Data Center. Growth was uneven across businesses: Data Center growth slowed year to date, while Client growth accelerated; Gaming revenue continued to decline. A large, noncash customer-warrant remeasurement charge affected reported earnings, and investment in inventory and other working capital weighed on cash generation.

Consolidated results

R&D expense was $2.803B in Q3 versus $2.139B, and $7.728B for 9M versus $5.761B. Q3 other expense, net, was $902M, compared with $82M of other income in Q3 FY2025; the 9M figures were $139M of expense and $219M of income. The current-period expense included a $1.097B fair-value remeasurement of customer warrant liabilities. Warrant-related noncash adjustments added $1.179B in the 9M operating cash-flow reconciliation. As qualifying customer revenue is recognized, the warrants also reduce revenue.

Segment results

*Included because 9M and Q3 revenue growth differed by at least 3 percentage points. Data Center revenue growth was 96.9% in Q3 and 86.9% for 9M; Client grew 7.2% and 17.9%, respectively. Gaming declined 40.5% and 25.9%; Embedded grew 29.4% and 18.2%. All Other’s operating loss primarily reflected acquisition-intangible amortization ($534M in Q3; $1.6B in 9M) and stock-based compensation ($523M; $1.5B). Segment operating results, including All Other, reconcile to consolidated operating income.

Cash flow, shares and balance sheet

Receivables, inventory and prepaid expenses used $2.894B, $3.543B and $2.061B of cash, respectively, partly offset by a $4.483B source from accounts payable. Inventory included $7.416B of work in process, up from $4.768B. AMD issued $4.75B of senior notes in August at coupons of 4.600%–5.500%, repaid $875M of notes at maturity and recorded $7.079B of net long-term debt. It had no borrowings on its new $5.0B revolving facility and no commercial paper outstanding; the commercial-paper limit increased from $3.0B to $5.5B. AMD was in compliance with debt covenants.

AMD repurchased $221M of stock in 9M, paid $1.836B for employee-award tax withholding and recorded $1.513B of stock-based compensation, versus $1.152B in 9M FY2025. The company increased its equity-plan authorization by 65M shares to 153M; 104M remained available. Its $14B repurchase authorization had $9.2B remaining.

Assets, obligations and strategic developments

Goodwill was $25.470B, compared with $25.126B at December 27, 2025: $4.034B in Data Center, $21.072B in Embedded and $364M in Client and Gaming. Acquisition-related intangible assets, net, were $15.101B (prior year-end $16.705B), comprising developed technology of $9.285B, customer relationships of $5.265B and product trademarks of $551M. Goodwill and these intangibles imply tangible equity of $27.818B. Amortization was $534M in Q3 and $1.6B in 9M; estimated remaining-2026 amortization is $527M, followed by $2.042B in FY2027 and $1.929B in FY2028.

AMD’s two customer warrants each cover up to 160M shares at $0.01 per share, subject to purchase, stock-price and technical or commercial milestones. No shares had vested or become exercisable. The September 26 weighted-average fair value was $178.58 per share, compared with a $14.25 weighted-average grant-date fair value. AMD recorded a $1.2B warrant liability attributable to qualifying revenue recognized to date; $4.5B of unrecognized grant-date fair value is expected to reduce revenue as further qualifying revenue is recognized. The warrants are excluded from diluted EPS until vesting conditions are met.

AMD agreed to acquire Taalas for approximately $2.9B in cash and stock, including up to $1.4B of contingent consideration, and World Labs for approximately $8.2B in stock; both were expected to close by year-end 2026, subject to conditions. The earlier ZT Systems acquisition had $4.409B of purchase consideration. AMD sold ZT’s manufacturing business to Sanmina in October 2025, retaining select design IP and employees; the sale provided $1.4B cash net of divested cash and adjustments plus Sanmina shares valued at $154M. AMD paid $243M for post-closing working-capital adjustments in 9M FY2026 and recorded a $348M earn-out receivable, with up to $450M of further earn-out cash possible through 2028. A five-year manufacturing services agreement with Sanmina remains in place.

Unconditional operating purchase commitments totaled $48.761B, including $22.206B in 2027. Maximum future cloud-compute commitments were $6.175B. Not-yet-commenced data-center leases intended for assignment or sublease to partners represent $13.3B of payments over 10–15 years; separate future data-center and corporate leases represent $0.2B. Maximum potential partner lease and debt guarantee payments were $8.5B ($7.7B for lease guarantees and $750M for debt guarantees). AMD also had $896M of future sublease receipts, including $559M in 2031 and thereafter, leaving exposure if partner arrangements do not cover lease obligations. The guarantees had no defaults or payments to date.

Other notable exposures and investments include up to $5.1B of commitments for equity investments through FY2028 and $6.175B of maximum future cloud-compute commitments; AMD invested $1.0B in a public-company equity offering in October 2026. Privately held strategic and emerging-technology investments were carried at $1.9B, and $1.1B of marketable-equity securities were subject to sale restrictions through October 2028. Continuing-operations tax benefits were $555M in Q3 and $65M in 9M, including discrete stock-compensation tax benefits of $772M and $918M, respectively. Long-term unrecognized tax-benefit liabilities, including interest and penalties, were $905M.

AMD — Q3 and nine months ended September 26, 2026

AMD’s revenue growth was led by Data Center, where strong EPYC processor and Instinct GPU demand more than offset higher costs and operating expenses. The mix shift also supported gross margin. For the first nine months, gross margin additionally benefited from the absence of prior-year inventory and related charges associated with U.S. export controls on MI308 GPUs.

Consolidated results

Revenue increased 45% year over year in Q3. R&D growth primarily reflected employee costs as AMD expanded data-center silicon, systems and software capabilities; higher marketing and administrative expense reflected go-to-market investment. Other expense was primarily driven by a $1.1B change in fair value of warrant liability. Q3 and 9M 2026 tax benefits included discrete stock-based-compensation tax benefits of $772M and $918M, respectively. The 9M 2025 tax benefit included an $853M discrete benefit from the IRS-approved release of uncertain tax positions.

Segments and revenue lines

*9M revenue is included because its growth rate differed from Q3 by at least three percentage points. Segment operating income is shown for Q3.

Data Center revenue grew 97% in Q3 and 87% for 9M. Client and Gaming revenue fell 8% in Q3 but rose 5% for 9M: Client revenue grew 7% in Q3 and 18% for 9M, while Gaming declined 40% and 26%, respectively, largely due to lower semi-custom revenue. Q3 Client growth reflected 6% higher processor unit shipments and 1% higher ASP; for 9M, shipments rose 21%, partly offset by a 2% ASP decline from product mix. Ryzen mobile processors drove shipment growth. Embedded revenue improved with stronger demand across end markets. Higher stock-based compensation from increased headcount drove the larger All Other operating loss, partly offset by lower acquisition-intangible amortization.

Cash flow and investment

Operating cash flow from continuing operations rose with higher net income (approximately $6.1B versus $2.6B), alongside $4.0B of non-cash and non-operating adjustments; $3.6B of operating-asset and liability changes partly offset those sources. The Data Center ramp increased inventory by $3.5B, accounts receivable by $2.9B and prepaid expenses and other assets by $2.1B, partly offset by a $4.5B increase in accounts payable. The 9M 2025 total included $920M of operating cash flow from discontinued ZT Manufacturing operations.

Investing outflows included $6.8B of short-term investment purchases, $1.8B of property and equipment purchases, and $1.1B of long-term investment purchases, partly offset by $3.4B of proceeds from short-term investment maturities and sales. Financing cash flow mainly reflected approximately $4.7B of net proceeds from August notes, offset by $1.8B of employee-equity-plan tax-withholding share repurchases and repayment of $875M principal of 4.212% Senior Notes at maturity. AMD also repurchased $221M of common stock.

Liquidity, debt and commitments

Cash, cash equivalents and short-term investments were $15.8B at September 26, 2026, versus $10.6B at December 27, 2025. Debt principal was $7.1B, up from $3.3B, following the August issuance of $4.75B aggregate principal amount of senior notes in four tranches and the September repayment of $875M principal. Maturities run from 2028 to 2052, with none due within 12 months. AMD had no borrowings on its $5.0B revolving facility (expiring 2031) or commercial paper program (up to $5.5B).

Unconditional operating commitments were $48.8B, including $33.4B expected in the remainder of FY2026 and FY2027, primarily for wafers, substrates, memory, manufacturing services and internal cloud compute. AMD also had up to $5.1B of investment commitments expected through FY2028. Cloud-compute capacity arrangements totaled $6.2B, including $1.5B expected payable in the remainder of FY2026 and FY2027; maximum commitments decline as third-party customers pay for capacity. Uncommenced data-center leases expected to be assigned or subleased to partners totaled $13.3B. Guarantees of partner lease and debt obligations had a maximum potential payment of $8.5B; no partner was in default and no guarantee payments had been made. Recognized lease obligations were $2.7B, with $0.9B of expected noncancellable sublease receipts through 2036. These commitments and guarantees create execution and counterparty exposure, though some are passed through to partners or contingent on default. AMD invested a further $1.0B in a public-company equity offering in October 2026.

AMD agreed to acquire Taalas and World Labs to expand model-research, inference and future super-intelligence hardware, software and systems capabilities; closing was expected in Q4 FY2026, subject to customary conditions and approvals. International sales represented 57% of Q3 revenue versus 64% a year earlier, and 66% of 9M revenue versus 67%. Export restrictions remain a potential industry and margin risk.

Market risk and investments

As of September 26, 2026, AMD’s marketable equity securities had a carrying value of $1.3B, compared with $0.2B at December 27, 2025. Non-marketable equity and other securities had a carrying value of $1.9B, up from $1.1B.

These investments are exposed to changes in market value. AMD regularly reviews its non-marketable securities for impairment. The company reported no material changes since December 27, 2025, in its exposure to interest-rate, default, or foreign-exchange risk.

Item 4. Controls and Procedures

As of September 26, 2026, AMD’s CEO and CFO concluded that the company’s disclosure controls and procedures were effective at the reasonable-assurance level. During the three months ended September 26, 2026, no changes in internal control over financial reporting materially affected, or were reasonably likely to materially affect, those controls. This section reports no financial results or other material business developments.

Principal risks and business uncertainties

AMD’s results depend on intense competition, uncertain semiconductor demand, successful product execution, and a supply chain largely operated by third parties. Product prices generally decline over a product’s life, making timely launches, competitive performance and costs, and sufficient unit volume important to sustaining margins. Missed design windows or platform launches can defer sales or exclude AMD from a customer’s product cycle. Rapid product transitions and broader portfolios also complicate forecasting and inventory management, increasing the risk of quality problems, excess or obsolete inventory, and write-downs.

Competition is particularly consequential in data-center accelerators: Nvidia’s products and proprietary software ecosystem may constrain AMD’s ability to win customers and maintain pricing, while Intel, Arm-based alternatives, and customers’ own products—including custom AI accelerators—could pressure demand. AMD reports strong demand since 2024 for its generative-AI-oriented accelerators, but AI adoption and customer investment remain uncertain. Data-center projects may be delayed or reduced by limits on power, water, memory, capital, or other infrastructure, as well as regulation and supply bottlenecks. Failure to develop and monetize AI products and software as expected could leave AMD with substantial investment and inadequate returns.

Helios rack-scale deployments add execution and demand risk: AMD licenses and supplies products for systems built by customers and manufacturing partners, but does not manufacture or sell the completed racks. Deployments depend on third-party networking, memory, power, cooling, mechanical components, and integration. Shortages, delays, defects, or customer demand changes could defer AMD shipments, expose it to inventory and cost risks, or leave it responsible for component commitments.

Demand, customers, and supply chain

Semiconductor demand is cyclical and exposed to macroeconomic weakness, inflation, interest rates, credit conditions, currency movements, tariffs, and inventory corrections. AMD’s sales are historically higher in the second half of the year, though market conditions and product transitions can alter seasonality. Customer and channel forecasts can be inaccurate; sales are generally made through individual purchase orders, and customers can generally cancel standard-product orders more than 30 days before shipment without significant fees. Long manufacturing lead times and short product lifecycles increase the risk of mismatches between supply and demand. Client and Gaming are exposed to PC and console cycles, while Embedded customers may reduce orders to work down inventory. Semi-custom SoC sales also depend on customers launching products and succeeding in the market.

A small number of customers account for a significant share of revenue and receivables and are expected to remain important. A major customer reducing purchases, experiencing operational disruption, or failing to pay could materially affect revenue, earnings, cash flow, and customer relationships. Distributors and add-in-board partners may prioritize competitors or terminate nonexclusive arrangements; partner credit exposure, price protections, and certain return rights can add collection and margin risk.

AMD relies on third parties for foundry capacity, assembly, testing, packaging, materials, and components. TSMC supplies all microprocessor and GPU wafers at 7 nm and smaller nodes; GLOBALFOUNDRIES is the primary source for larger nodes. TSMC, UMC, and Samsung supply programmable-logic-device ICs, and two Tongfu-affiliated joint ventures provide most ATMP services. Capacity constraints, competing demand, yield or quality issues, price increases, or limited alternatives could delay shipments, raise unit costs, and reduce gross margin. Annual wafer targets, long-term purchase commitments, prepayments, and supplier support commitments can leave AMD with excess inventory or costs if demand falls or deliveries fail. AMD reported some inventory loss from a contract-manufacturer incident in 2024. Nearly all assembly and final testing take place at third-party facilities in Mainland China, Malaysia, and Taiwan; Taiwan-related geopolitical tensions are a particular supply risk. International sales were 57% of net revenue in Q3 2026.

Trade, regulation, and operational exposure

Export controls and U.S.–China tensions may restrict sales, supply, customer support, and investment. October 2023 U.S. controls cover certain AMD Instinct integrated circuits, EPYC “Venice” CPUs, and Versal FPGAs. A U.S. license requirement introduced in April 2025 affected MI308 exports to China; AMD incurred inventory and related charges in 2025, obtained some licenses, and began shipments to certain China-based customers at fiscal year-end. MI308 revenue remains dependent on licensing and Chinese import rules. In H1 2026, AMD obtained some licenses for MI325 shipments to certain China-based customers; licensed shipments require U.S. inspection and incur a 25% tariff upon importation into the United States. U.S. officials expressed an expectation in August 2025 that the government would receive 15% of revenue from licensed MI308 China sales, but no regulation establishing this requirement had been published. Further controls, tariffs, retaliatory measures, or license delays could strand inventory, raise costs, or encourage customers to switch to competing suppliers. THATIC and its two joint ventures have been on the U.S. Entity List since 2019.

Cyberattacks and product-security vulnerabilities could disrupt operations, expose confidential information or intellectual property, and lead to customer losses, remediation costs, litigation, regulatory action, and reputational harm. Product or third-party component defects may result in warranty claims, recalls, replacement costs, lost revenue, and liability that could exceed insurance coverage. Software and ecosystem support—including operating systems, drivers, and independent software vendors—is also important to adoption. Gray-market sales can create counterfeit or misrepresented goods, complicate forecasting, and pressure demand and margins.

Climate events, water or energy shortages, public-health events, and utility outages can disrupt AMD, suppliers, customers, and data-center projects. Such events may delay manufacturing or customer deployments while leaving AMD with obligations under leases, guarantees, compute-capacity commitments, or other support arrangements. Privacy, AI, export, environmental, human-rights, and climate-disclosure requirements are evolving and may increase compliance costs, constrain products or markets, or result in penalties and litigation. AMD also faces tax uncertainty—including deferred-tax-asset realization—IP and other litigation, environmental remediation exposure at three Superfund sites, and risks from acquisitions, joint ventures, and investments.

Financing, commitments, and share-price exposure

Senior notes carry coupons of 3.924%–5.500% and mature from 2028 to 2052; AMD also guarantees Xilinx’s 2.375% notes due 2030. In May 2026, AMD replaced its $3.0 billion revolver with a five-year, unsecured $5.0 billion revolving credit facility. Its covenants restrict certain liens and major asset transactions, and cross-default provisions could permit acceleration; AMD cautions that it may not have sufficient assets to repay accelerated borrowings.

AMD’s leases, guarantees, long-term capacity purchases, cloud-compute commitments, and financing support could require payments even if projects are delayed, partners fail to perform, or demand is insufficient. Inability to assign or sublease data centers, or to use or resell committed compute capacity, could leave AMD bearing substantial costs without expected benefits.

Customer warrants issued to OpenAI OpCo., LLC and Meta Platforms, Inc. are exercisable for up to a combined 320 million AMD shares, subject to vesting and exercise conditions. Their fair value is remeasured through GAAP earnings, creating potentially substantial non-cash gains or losses and period-to-period earnings volatility. AMD’s repurchase authorization is up to $14 billion, with $9.2 billion remaining as of September 26, 2026; repurchases are discretionary and may reduce cash reserves. Share-price volatility and competition for skilled employees, especially in AI and machine learning, may also affect hiring, retention, and financing opportunities.

For the quarter ended September 26, 2026, no AMD directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement.