AMD: CapEx Is Fueling The Next Leg

AMD's data center revenue surged 107% to $6.7 billion, reaching 58% of revenue with a 31% operating margin. Q2 CapEx jumped to $808 million, but AMD still generated $1.6 billion of free cash flow during the quarter. Helios demand exceeded initial expectations, while management expects total data center revenue to more than double during 2027. OpenAI, Meta, and Anthropic provide anchor AI demand, while Microsoft plans to deploy AMD's Helios platform through Azure. At roughly 32x consensus 2027 earnings, AMD could grow into its premium valuation as AI revenue and earnings accelerate.

Following the Q2 results, I remain extremely bullish on AMD (AMD) as the data center revenue continues its strong momentum with Helios demand outperforming, and AMD expects data center revenue to increase more.