AMD's data center business just more than doubled, and gaming is paying the price

[Skye Jacobs]

Bottom line: AMD's latest quarter makes clear where the company's business is shifting: toward data centers and AI workloads. The company reported $6.7 billion in data center revenue in Q2 2026, more than double the $3.2 billion it generated in the same period a year earlier and up from $5.8 billion in the previous quarter. Data center now accounts for 58% of AMD's total revenue, underscoring how much demand for AI compute is driving the business.

AMD's overall revenue reached a record $11.5 billion, up 50% year-over-year. "Revenue increased 50 percent year-over-year to a record $11.5 billion, driven by continued strength in our Data Center business, which represented 58% of company revenue in the quarter," AMD CFO Jean Hu wrote. That mix puts data center and AI-related compute at the center of AMD's financial results rather than its traditional PC and gaming lines.

On the earnings call, CEO Lisa Su said the company expects this trend to continue. She told analysts that AMD anticipates "data center segment revenue to more than double year-over-year in 2027," pointing to a longer-term build-out of AI infrastructure rather than a short spike in spending. Su tied the current results directly to AI demand: "AI is driving a significant expansion in demand for compute across all of our markets, and our leadership portfolio and growing customer visibility position us exceptionally well to capture this expanding opportunity and deliver substantial revenue and earnings growth in the years ahead."

The $6.7 billion data center figure reflects broad use of AMD chips in AI-focused environments – large training clusters, inference systems, and cloud platforms that are layering AI into more services.

While AMD did not break out specific AI products in detail in these comments, the revenue growth and forward guidance point to AI workloads as the main driver inside the data center segment.

The picture looks different on the gaming side. Gaming revenue fell 31% year-over-year to $779 million. Su said gaming graphics revenue fell compared to a year ago, noting that higher component costs across the industry pushed graphics card prices up and hurt overall demand.

Higher costs and price-sensitive consumers weighed on sales tied to consoles such as the Xbox Series X/S and PlayStation 5, as well as devices like Valve's Steam Deck.

Credit: App Economy Insights

Even with that decline, AMD's combined PC and gaming business still grew 6% compared to last year, helped by stronger client processor sales. Client revenue rose 23%, driven by Ryzen processors. Those chips are increasingly used in systems that advertise AI-related capabilities, such as local inference and AI-powered features, alongside standard performance metrics.

The numbers highlight a company that is now more closely tied to data center and AI spending cycles than to consumer hardware trends. The surge in data center revenue, coupled with AMD's forecast that the segment will more than double year-over-year in 2027, suggests the company will continue investing in dense computing, faster memory, and advanced interconnects to support large-scale AI training and inference.

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AMD's data center business just more than doubled, and gaming is paying the price

 

[ScottSoapbox]

Went from about 6:1 to 9:1 in a single quarter (data center to gaming).

Luckily, much of the advances help all chip usages

 

[Kirby1]

Love how instead of doing anything at all about all the political bot accounts here's they just don't allow comments on political topics anymore.

 

[JMGuy]

I dunno, seeing AMD shift its focus to data centers might actually be good news for the vast numbers of gamers I’ve heard complaining for years.

The mainstream gaming industry has been so obsessed with chasing raw power and graphics that too many games have become just bloated and boring. If the hardware tech giants lose interest in treating gaming as a primary cash cow, maybe it finally forces a reality check and gives smaller devs a window with a better sandbox to thrive in.

I mean, it couldn’t hurt the industry to have some real incentive to refocus on what made gaming a culture to begin with: actual fun.

 

[jbright]

58% of revenue from data center now, gaming down to $779 million. In a few years "AMD Gaming" is going to be a division nobody remembers existed, like Intel's phone modem business.

Console makers should be sweating too — if AMD's silicon is more profitable in a server rack than in a PS5, the "next-gen" console chip becomes the thing that gets deprioritized when Nvidia and AMD are fighting over AI capacity.

 

[arrowflash]

I dunno, seeing AMD shift its focus to data centers might actually be good news for the vast numbers of gamers I’ve heard complaining for years.

The mainstream gaming industry has been so obsessed with chasing raw power and graphics that too many games have become just bloated and boring. If the hardware tech giants lose interest in treating gaming as a primary cash cow, maybe it finally forces a reality check and gives smaller devs a window with a better sandbox to thrive in.

I mean, it couldn’t hurt the industry to have some real incentive to refocus on what made gaming a culture to begin with: actual fun.

I don't know if that's going to play out the way consumers hope. I think most old school devs have already retired or moved to other industries, and optimization is a lost art and lost technology for current video game developers and big studios. They will probably just start building games that run on the cloud.

 

[letsgoiowa]

AMD shares were down immediately after this news. Good news and everyone sells! Interesting. It's the standard cycle at this point.

 

[J Oelschl]

A healthy AMD is good for everything. Great processors and trickle down hardware for graphics cards from the AI based hardware. You cannot blame them for going where the cash is flowing. You can see that gaming dollars are shrinking.

 

[Axeia]

I dunno, seeing AMD shift its focus to data centers might actually be good news for the vast numbers of gamers I’ve heard complaining for years.

The mainstream gaming industry has been so obsessed with chasing raw power and graphics that too many games have become just bloated and boring.

Hard disagree.

It's not the raw power and graphics that lead to games becoming bloated and boring imo. It's the big studios trying to maximize profits that did & do. When an AA-studio has an analyst determine what the most profitable type of game is, a psychologist 'improving' the gameplay loop by trying to integrate every possible dopamine hit into it, a 'DEI expert' revamp characters and designs and the CEO wanting a certain list of features ticked off because the competition has them...
I think that is what leading to generic unenjoyable slop. Then they try to distinguish themselves by trying to make the graphics prettier than what was previously done.

If the hardware tech giants lose interest in treating gaming as a primary cash cow, maybe it finally forces a reality check and gives smaller devs a window with a better sandbox to thrive in.

I mean, it couldn’t hurt the industry to have some real incentive to refocus on what made gaming a culture to begin with: actual fun.

Be careful what you wish for. I'm really hoping the bigger studios with money behind them come to their senses before PC gaming becomes an ever shrinking niche of games by enthusiasts for enthusiasts whilst all the studios with access to resources just shift over to the far more profitable side of gaming... mobile.

And in my experience gaming on mobile is... well, I'll pass on calling myself a gamer if that's what the future holds - I'll have to find myself a different hobby.

 

[redgarl]

AMD shares were down immediately after this news. Good news and everyone sells! Interesting. It's the standard cycle at this point.

It is the typical shorter lifecycle. Investors are going to digest the news and the stock will gain back its lost when the shorters buy back the shares.

AMD is doing really well and they are about to get their Nvidia moment, it is just a matter of time. When this is going to happen, the shorters will pay the price. If there is a stock I would not bet against right now, it would be this one.

At this point, I am keeping my shares until I retire.

 

[redgarl]

Hard disagree.

Well, we got an angry PCMR.

Sorry Pal, but I take a company building the future over making gaming hardware for a bunch of entitled gamers.

Reality hit hard, the semiconductor industry was taken for granted, and now everyone is waking up and realize how dependent they are to it.

I am not feeling an once of empathy for your kind. The amount of fanboyism I witnessed over the years literally disconnected me from the gaming community.

 

[redgarl]

58% of revenue from data center now, gaming down to $779 million. In a few years "AMD Gaming" is going to be a division nobody remembers existed, like Intel's phone modem business.

Console makers should be sweating too — if AMD's silicon is more profitable in a server rack than in a PS5, the "next-gen" console chip becomes the thing that gets deprioritized when Nvidia and AMD are fighting over AI capacity.

The new consoles are around the corners and embedded is going to explode again. Right now, memory prices are killing the client segment. You are dramatizing over something that makes no sense since SONY, MS and Valve are using AMD's hardware.

Gaming will be fine.

 

[JamesBlond]

The new consoles are around the corners and embedded is going to explode again. Right now, memory prices are killing the client segment. You are dramatizing over something that makes no sense since SONY, MS and Valve are using AMD's hardware.

Gaming will be fine.

when there is a price push for things like ram or components, the truth is always hidden, so this current push is so that companies don't have to pay so much for AI, they suck and milk the consumer dry by lying about prices and know you can't do anything then they take your money and make what they wanted.

 

[Endymio]

It's not the raw power and graphics that lead to games becoming bloated and boring imo. It's the big studios trying to maximize profits that did & do.

Game studies -- along with every other company on earth -- have always tried to maximize profits. What's changed is very simple: when your game is 16-color block graphics (or worse, no graphics at all-- just text) either your gameplay is extremely compelling, or you have no game at all. But today's stunning visuals can and do convince people to buy a game -- screenshots are the very first thing gamers look for ... and the first thing they'll knock about a game is bad graphical performance, regardless of how goo are the actual game mechanics.

There's a second factor as well. The average game of the 1980s spent a small fraction of its budget on graphic assets. Today, developing those assets can easily be 90% of more of the total budget-- leaving a lot less left over for coding a good game.

 

[Axeia]

Game studies -- along with every other company on earth -- have always tried to maximize profits.

Only to a certain degree. At the very start it was almost secondary to make profit and some of the truly passionate people wanted to share that passion through a new medium (old Blizzard vs current Blizzard makes for a stark contrast).

Baldur's Gate 3 is the prime example of how not listening to the profit maximizing guys in suits but instead just trying to make a fun game can (rather ironically) lead to massive financial success.

 

[SRB]

I understand the market, but don't think it's current form is what was intended. the problem often isn't with the companies, it's that the market looks far more like a casino than an investment strategy. AMD has been on the short end of that since Ryzen started. AMD has increased revenue, profits, and margins consistently, yet with every screwball rumor, the stock takes a haircut.

In this case, AMD builds a console chip, the new consoles sell out for a year or so, stock normalizes and chip sales drop steadily. Lather, rinse, repeat. And every time a console nears EOL, AMD's stock drops because some genius stockbroker looks at the financials and finds ONE line with red ink in a sea of black ink.

As far as AMD shafting gamers, the article mentions Ryzen chips were selling decently...With RAM prices like they are, I'm surprised ANYONE is buying a CPU, especially for a new build. Don't forget, Zen was originally the same cores across the whole line, only the numbers and I/O changed, and it's still not that different. Gamer's get the same advancements the big iron gets.

 

[Endymio]

Only to a certain degree. At the very start it was almost secondary to make profit and some of the truly passionate people wanted to share that passion through a new medium... Baldur's Gate 3 is the prime example ...

This nostalgic wishful thinking is so common that psychologists have a term for it: rosy introspection. Game studios have always tried to maximize profits; it's simply that some of them have (both then and now) understood better that the best way to do this is to build products that people want to buy.

... the problem often isn't with the companies, it's that the market looks far more like a casino than an investment strategy. AMD has been on the short end of that since Ryzen started. AMD has increased revenue, profits, and margins consistently, yet with every screwball rumor, the stock takes a haircut.

I think you're misjudging the market. AMD's current trailing P/E is an astronomical 120, and throughout the Ryzen era it has ranged from a (still high) 33+ to an outrageous 1,000+. Clearly, investors have continuously and invariably believed that AMD's future prospects are much better than they're presently doing.