In the second quarter of 2026, AMD posted record overall revenue, driven by a strong data center segment, but the gaming division suffered a significant decline. Total revenue reached $11.5 billion, up 50% year-over-year and 13% quarter-over-quarter. However, the gaming segment generated only $779 million, a 31% drop year-over-year. The primary cause, according to the company, is lower demand for semi-custom chips, tied to the late stage of the current console lifecycle.
Gaming revenue decline is also due to rising component costs
CEO Lisa Su explained that gaming graphics revenue decreased due to higher industry-wide component costs. These costs led to higher graphics card prices, reducing consumer demand. "Higher prices have weighed on demand," Su said. The company had already anticipated a 20% decline in gaming revenue in the second half of the year, which was confirmed during the earnings call. CFO Jean Hu added that there will be a modest decline in the client gaming segment, with slight growth in client offset by a strong double-digit decline in gaming.
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Despite the decline, AMD is optimistic about future AI PCs
Despite difficulties in gaming, Lisa Su expressed optimism about the client CPU business, particularly for AI PCs. "AI PCs will become more and more important in 2026," she said. The first half of the year was very strong for the company, and despite expectations of a market decline in the second half, performance has been better than expected. The overall client business, including gaming, brought in $3.8 billion, up 6% year-over-year, thanks to strong demand for Ryzen CPUs and increased sales of Ryzen PRO. Commercial adoption expanded, with Ryzen PRO sales growing over 50% year-over-year, with new wins in healthcare, technology, automotive, and financial services.
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Data center revenue doubles and drives overall growth
The gaming decline has been massively offset by surging data center revenue, which increased 107% year-over-year to $6.7 billion. The company expects this growth to continue in the next quarter. Jean Hu indicated that the Q3 guidance is approximately $13 billion, with a 41% increase year-over-year, driven by strong data center growth. The embedded business also saw unexpected growth, up 19% year-over-year to $977 million, likely due to demand for physical AI. This makes gaming the smallest part of AMD's revenue pie, a position that may persist until new discrete GPUs or console hardware are launched.
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For more details, check the original source on Tom's Hardware: AMD doubles data center revenue year over year, but gaming revenue plunged by 31%.
