AMD 10-K & 10-Q changes, risk factors and insider trading

◦•The markets in which our products are sold are highly competitive and rapidly evolving.

◦•The semiconductor industry is highly cyclical and has experienced severe downturns.

◦•The demand for our products depends in part on the market conditions in the industries into which they are sold.

◦•The success of our business depends on our ability to introduce products on a timely basis with features and performance levels that provide value to our customers while supporting significant industry transitions.

◦•The loss of a significant customer may have a material adverse effect on us.

◦•Economic and market uncertainty may adversely impact our business and operating results.

◦•Our operating results are subject to quarterly and seasonal sales patterns.

◦•If we cannot adequately protect our technology or other intellectual property through patents, copyrights, trade secrets, trademarks and other measures, we may lose a competitive advantage and incur significant expenses.

◦•Unfavorable currency exchange rate fluctuations could adversely affect us.

◦•We rely on third parties to manufacture our products, and if they are unable to do so on a timely basis in sufficient quantities and using competitive technologies, our business could be materially adversely affected.

◦•Essential equipment, materials, substrates or manufacturing processes may not be available to us.

◦•We may fail to achieve expected manufacturing yields for our products.

◦•Our revenue from our semi-custom System-on-Chip (SoC) products is dependent upon our semi-custom SoC products being incorporated into customers’ products and the success of those products.

◦•Our products may be subject to security vulnerabilities that could have a material adverse effect on us.

◦•IT outages, data loss, data breaches and cyberattacks could disrupt operations and compromise our intellectual property or other sensitive information, be costly to remediate or cause significant damage to our business, reputation, financial condition and results of operations.

◦•Uncertainties involving the ordering and shipment of our products could materially adversely affect us.

◦•Our ability to design and introduce new products includes the use of third-party intellectual property.

◦•We depend on third-party companies for the design, manufacture and supply of motherboards, software, memory and other computer platform components to support our business and products.

◦•If we lose Microsoft Corporation’s support for our products or other software vendors do not design and develop software to run on our products, our ability to sell our products could be materially adversely affected.

◦•Our reliance on third-party distributors and add-in-board (AIB) partners subjects us to certain risks.

◦•Our business depends on the proper functioning of our internal business processes and information systems.

◦•Our products may not be compatible with some or all industry-standard software and hardware.

◦•Costs related to defective products could have a material adverse effect on us.

◦•We may fail to maintain the efficiency of our supply chain as we respond to changes in customer demand.

◦•We outsource to third parties certain supply-chain logistics functions.

◦•We may be unable to effectively control the sales of our products on the gray market.

◦•Climate change may have a long-terman impact on our business.

◦•Government actions and regulationsregulations, including but not limited to export regulations, import tariffs and trade protection measures, may limit our ability to export our products to certain customers.

◦•If we cannot realize our deferred tax assets, our results of operations could be adversely affected.

◦•Our business is subject to potential tax liabilities, including as a result of tax regulation changes.

◦•We are party to litigation and may become a party to other claims or litigation.

◦•We are subject to environmental laws, conflict minerals regulations, as well as a variety of other laws or regulations.

◦•Evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters could result in additional costs, harm to our reputation and a loss of customers.

◦•Issues related to the responsible use of AI may result in reputational, competitive and financial harm and liability.

◦•The agreements governing our notes, our guarantee of Xilinx’s notes,notes and ourthe Revolving Credit Agreement impose restrictions on us that may adversely affect our ability to operate our business.Agreement.

◦•Acquisitions, joint ventures, and/or strategic investments, and the failure to integrate acquired businesses may fail to materialize their anticipated benefits and could disrupt our business.

◦•Any impairment of our tangible, definite-lived intangible or indefinite-lived intangible assets, including goodwill, may adversely impact our financial position and results of operations.

◦•Our worldwide operations are subject to political, legal and economic risks and natural disasters.

◦•We may incur future impairments of our technology license purchases.

◦•Our inability to continue to attract and retain qualifiedkey personnelemployees may hinder our business.

◦•Our stock price is subject to volatility.

We believe thatDelivering the mainlatest and best products to market on time is critical to revenue growth. The competitiveness of our products depends on a number of factors thatincluding, determine our product competitiveness areperformance, total cost of ownership, timely product introductions, product quality,quality and reliability, product features and capabilities (including accelerations for key workloads such as AI,capabilities, energy efficiency (including power consumption and battery life, given their impact on total cost of ownership), reliability, performance, size (or form factor), selling price, cost, adherence to industry standards (and the creation of open industry standards), level of integration, software and hardware compatibility, ease of use and functionality of software design tools, completeness of applicable software solutions, security and stability, brand recognition and availability. If competitors introduce competitive new products into the market before us, demand for our products could be adversely impacted and our business could be adversely affected. Further, our competitors have significant marketing and sales resources which could increase the competitive environment in a declining market or during challenging economic times, leading to lower prices and a reduction in our margins. To the extent our competitors introduce competitive new products and technologies into the market before we do, or introduce products and technologies that provide better performance/experience or at better prices, our products and technologies may be comparatively less competitive and our competitive position may weaken, which could adversely harm our business and results of operations.

The semiconductor industry is highly cyclical and has experienced significant downturns, often in conjunction withalongside constant and rapid technological change, wide fluctuations in supply and demand, continuous new product introductions, price erosion and declines in general economic conditions. The growth of AI is further creating pressure on the semiconductor industry to timely design, manufacture and deliver semiconductor products and solutions to meet customer demand for computing power and AI infrastructure. We have incurred substantial losses in previous downturns, due to substantial declines in average selling prices; the cyclical nature of supply and demand imbalances in the semiconductor industry; a decline in demand for end-user products that incorporate our products; and excess inventory levels and periods of inventory adjustment. Such industry-wide fluctuations may materially adversely affect us in the future. Global economic uncertainty and weakness have in the past impacted the semiconductor market as consumers and businesses have deferred purchases, which negatively impacted demand for our products. Our financial performance has been, and may in the future be, negatively affected by these downturns. The growth of our business is also dependent on continued demand for our products from high-growth adjacent emerging global markets. Our ability to be successful in such markets depends in part on our ability to establish adequate local infrastructure, as well as our ability to cultivate and maintain local relationships in these markets. If demand from these markets is below our expectations, sales of our products may decrease, which would have a material adverse effect on us.

Industry-wide fluctuations in the computer marketplace have materially adversely affected us in the past and may materially adversely affect us in the future. We offer products that are used in different end markets and the demand for our products can vary among our Data Center, Client, Gaming and Embedded end markets. For instance, inIn our Data Center segment, we offer products that are optimized for generative AI applications and since the fourth quarter of 2023,2024, we have experienced significant demand for our AI accelerators. The demand for such products will in part will depend on the extent to which our customers utilize generative AI solutions in a wide variety of applications, and both the near-term and long-term trajectory of such generative AI solutions is unknown. Also,Some customers in AI markets may be unable to secure access to internal and external infrastructure, including availability of sufficient data center capacity or energy for the buildout of data centers that use our Clientproducts. segmentIn revenueaddition, isconstruction focuseddelays in the scheduled buildout of data centers could impact the timing of customer demand. Such delays in the buildout of data centers could have a material adverse effect on theour consumerbusiness, desktopfinancial condition and notebookfuture PCgrowth segmentsstrategy. Customers may also lack, or be unable to, secure capital to fund their required AI infrastructure and willmay dependrequest inalternative partfinancing onor deferred‑payment arrangements from vendors and suppliers. These limitations could delay or reduce the market’sdemand adoption of AI PCs. We are actively building AI capabilities into allfor our Client products, suchwhich ascould Ryzennegatively AIimpact PCour processors, but there can be no assurance about the rate and pace of adoption of such product offerings. In the past, revenues from the Client and Gaming segments have experienced a decline driven by, among other factors, the adoption of smaller and other form factors, increased competition and changes in replacement cycles.revenue.

Our Client and Gaming segment revenue is focused on the consumer desktop and notebook PC segments and will depend in part on the market’s adoption of AI PCs. We are actively building AI capabilities into all our Client products, such as Ryzen AI PC processors, but there can be no assurance about the rate and pace of adoption of such product offerings. In the past, revenue from the Client and Gaming segment has experienced a decline driven by, among other factors, the adoption of smaller and other form factors, increased competition and changes in replacement cycles. In addition, our GPU revenue in the past has been affected in part by the volatility of the cryptocurrency mining market. If we are unable to manage the risks related to the volatility of the cryptocurrency mining market (including potential actions by global monetary authorities), our GPU business could be materially adversely affected. The success of our semi-custom SoC products in our Client and Gaming segment is dependent on securing customers for our semi-custom design pipeline and consumer market conditions, including the success of game console systems and next generation consoles for Sony and Microsoft. Our Embedded segment primarily includes embedded CPUs and GPUs, APUs, FPGAs and Adaptive SoC products some of which are subject to macroeconomic trends and volatile business conditions. To the extent our embedded customers are faced with higher inventory levels, they may choose to draw down their existing inventory and order less of our products. For example, our Embedded segment revenue decreased in 2024 as customers continued to normalize their inventory levels.

In 2024,2025, we delivered strong annual revenue growth with net revenue increasing 14%34% to $25.8$34.6 billion, compared to $22.7$25.8 billion in 2023.2024. This growth was driven by the performance of our Data Center and Client and Gaming segments. Data Center net revenue of $12.6$16.6 billion increased by 94%32% compared to $6.5$12.6 billion in 2023,2024, primarily driven by higherstrong salesdemand offor our 5th generation AMD EPYC™ processors and AMD Instinct™ GPUsMI350 Series GPUs. Client and AMD EPYC™ CPUs. ClientGaming segment net revenue of $7.1$14.6 billion in 20242025 increased by 52%51% compared to $4.7$9.6 billion in 2023,2024, primarily duedriven toby higherstrong salesdemand offor our AMD Ryzen™ mobileprocessors, semi-custom game consoles SoCs and desktopRadeon™ processors.gaming GPUs. The increase in annual net revenue was partially offset by a decrease in net revenue in our GamingEmbedded andsegment. Embedded segments. Gaming net revenue of $2.6$3.5 billion decreased by 58%3% compared to $6.2 billion in 2023. The decrease in net revenue was primarily due to lower semi-custom product revenue. Embedded net revenue of $3.6 billion decreased by 33% compared to net revenue of $5.3 billion in 2023,2024, as customerscertain normalizedend theirmarket inventorydemand levels.remained mixed.

Cash, cash equivalents and short-term investments as of December 28,27, 20242025 were $5.1$10.6 billion, compared to $5.8$5.1 billion at the end of 2023.2024. Our aggregate principal amount of total debt as of December 28,27, 20242025 was $1.8$3.3 billion, compared to $2.5$1.8 billion as of December 30, 2023. We repaid our 2.95% Senior Notes due 2024 with a principal amount of $750 million in June28, 2024.

DuringIn the twelve months ended December 28, 2024,2025, we returned a total of $862$1.3 millionbillion to shareholders through the repurchase of 5.912.4 million shares of common stock under our stock repurchase program. As of December 28,27, 2024,2025, $4.7$9.4 billion remained available for future stock repurchases under this program. The stock repurchase program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time.

Our discussion and analysis of our financial condition and results of operations are based upon our consolidatedConsolidated financialFinancial statements,Statements, which have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts in our Consolidated Financial Statements. We evaluate our estimates on an on-going basis, including those related to our revenue, inventories, business combinations, goodwill, long-lived and intangible assets, and income taxes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Although actual results have historically been reasonably consistent with management’s expectations, the actual results may differ from these estimates or our estimates may be affected by different assumptions or conditions.

Revenue Allowances. Revenue contracts with our customers include variable amounts which we evaluate under ASC 606-10-32-8 through 14 in order to determine the net amount of consideration to which we are entitled and which we recognize as revenue. We determine the net amount of consideration to which we are entitled by estimating the most likely amount of consideration we expect to receive from the customer after adjustments to the contract price for rights of return and rebates to our original equipment manufacturersmanufacturer (OEM) and original design manufacturer (ODM) customers and rights of return, rebates and price protection on unsold merchandise to our distributor customers.

Inventory Valuation. We value inventory at standard cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about future demand and market conditions. Material assumptions we use to estimate necessary inventory carrying value adjustments can be unique to each product and are based on specific facts and circumstances. In determining excess or obsolescence reserves for products, we consider assumptions such as changes in business and economic conditions, other-than-temporary decreases in demand for our products, and changes in technology or customer requirements. In determining the lower of cost or net realizable value reserves, we consider assumptions such as recent historical sales activity and selling prices, as well as estimates of future selling prices. If in any period we anticipate a change in assumptions such as future demand or market conditions to be less favorable than our previous estimates, additional inventory write-downs may be required and would be reflected in cost of sales, resulting in a negative impact to our gross margin in that period. If in any period we are able to sell inventories that had been written down to a level below the ultimate realized selling price in a previous period, related revenue would be recorded with a lower or no offsetting charge to cost of sales resulting in a net benefit to our gross margin in that period. Overall, our estimates of inventory carrying value adjustments have been materially consistent with actual results.

Goodwill. Goodwill is the excess of the aggregate of the consideration transferred over the identifiable assets acquired and liabilities assumed in connection with business combinations. Our reporting units are at the operating segment level. Our goodwill is contained within three reporting units: Data Center, Client and Gaming, and Embedded. We perform our goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more frequent basis. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment, which occurs when the carrying value of a reporting unit exceeds its fair value. Significant judgment is required in estimating the fair value of our reporting units to determine if the fair values of those units exceed their carrying values and an impairment to goodwill is required when a quantitative goodwill impairment test is performed.values. We typicallymay obtain the assistance of third-party valuation specialists to help in determining the fair value of our reporting units. Changes in operating plans or adverse changes in the business or in the macroeconomic environment in the future could reduce the underlying cash flows used to estimate fair values and could result in a decline in fair value that would trigger future impairment charges of our reporting units’ goodwill. Based on our annual qualitative impairment test, we concluded that it is not more likely than not that the carrying value of each reporting unit exceeded its fair value.

Income Taxes. In determining taxable income for financial statement reporting purposes, we must make certain estimates and judgments. These estimates and judgments are applied in the calculation of certain tax liabilities and in the determination of the recoverability of deferred tax assets which arise from temporary differences between the recognition of assets and liabilities for tax and financial statement reporting purposes. We regularly assess the likelihood that we will be able to recover our deferred tax assets. Unless recovery is considered more-likely-than-not (a probability level of more than 50%), we will record a charge to income tax expense in the form of a valuation allowance for the deferred tax assets that we estimate will not ultimately be recoverable or maintain the valuation allowance recorded in prior periods. When considering all available evidence, if we determine it is more-likely-than-not we will realize our deferred tax assets, we will reverse some or all of the existing valuation allowance, which would result in a credit to income tax expense and the establishment of an asset in the period of reversal.

The federal valuation allowance maintained is due to limitations, under Internal Revenue Code Section 382 or 383, separate return loss year rules, or dual consolidated loss rules. Certain state and foreign valuation allowances are maintained due to a lack of sufficient sources of future taxable income.

The following table provides a summary of net revenuerevenue, cost of sales and operating expenses, and operating income (loss) by segment for 20242025 and 20232024:

GamingData Center net revenue of $2.6$16.6 billion in 20242025 decreasedincreased by 58%,32%, compared to net revenue of $6.2$12.6 billion in 2023.2024. The decrease in net revenueincrease was primarily duedriven toby lowerstrong semi-customdemand productfor revenue.our AMD EPYC™ processors and AMD Instinct™ GPU accelerators.

EmbeddedData Center operating income was $1.4$3.6 billion in 2024,2025, compared to operating income of $2.6$3.5 billion in 2023.2024. The decreaseincrease in operating income was primarily drivendue to higher revenue, partially offset by lowerhigher revenue.cost of sales, approximately $440 million of net inventory and related charges associated with the U.S. government export control on AMD Instinct™ MI308 Data Center GPU products and higher operating expenses.

Comparison of Gross Margin, Expenses, Licensing Gain, Interest Expense, Other Income (expense) and Income Taxes

Research and development expenses of $8.1 billion in 2025 increased by $1.6 billion, or 25%, compared to $6.5 billion in 2024 increased by $584 million, or 10%, compared to $5.9 billion in 2023.2024. The increase was primarily due to higher employee-related costs due tofrom an increase in headcount in support of our continued focus on our AI strategy.

Marketing, general and administrative expenses of $2.8$4.1 billion in 20242025 increased by $431$1.4 million,billion, or 18%,52%, compared to $2.4$2.7 billion in 2023.2024. The increase was primarily due to an increase in go-to-market activities to support our revenue growth.

Amortization of acquisition-related intangibles of $2.4$2.3 billion for 20242025 decreased by $417$140 million, or 15%,6%, compared to $2.8$2.4 billion in 2023. The decrease was2024, primarily due to certaina lower balance of amortizable acquisition-related intangibles beingcompared fully amortized into the prior fiscal year.

Interest expense of $131 million in 2025 increased by $39 million compared to $92 million in 2024 decreased by $14 million compared to $106 million in 2023,2024, primarily due to repaymentthe issuance of the$1.5 2.95%billion Seniorin aggregate principal amount of 4.212% Notes dueand 4.319% Notes in JuneMarch 2024.2025.

•Government actions and regulations, including butexport notcontrols, limited to exportnational-security-based regulations, import tariffs and trade protection measures, may limit our ability to export our products to certain customers.customers, increase costs, harm our competitive position and materially affect our business.

•OurIf inabilitywe are unable to continueattract, to attractdevelop and retain key employees may hinderemployees, our business.business could be materially affected.

Delivering the latest and best products to market on time is critical to revenue growth. The competitiveness of our products depends on a number of factorsfactors, including,including: performance, total cost of ownership, timely product introductions, product quality and reliability, product features and capabilities, energy efficiency (including power consumption and battery life, given their impact on total cost of ownership), size (or form factor), selling price, cost, adherence to industry standards (and the creation of open industry standards), level of integration, software and hardware compatibility, ease of use and functionality of software design tools, completeness of applicable software solutions, security and stability, brand recognition and availability.

Competition is expected to remain intense, driven by rapid technological change, evolving standards, shifting customer preferences, product obsolescence, and frequent product launches from both established and new competitors. Some of our competitors may possess stronger market positions, larger customer bases, more design wins, and greater financial, sales, marketing, and distribution resources than us. As a result, they may be able to acquire market share or limit our ability to do so, more effectively capitalize on new market opportunities, and transition their products more efficiently than we can. Some competitors are pursuing alternative computing architectures, such as Arm, which could grow the Arm ecosystem and increase competition in consumer, commercial and data center,center markets, reducing demand for our products. Additionally, we may encounter competition from customers who internally develop products to support similar AI workloads similar to those supported by ours,our orproducts, particularly as AI continues to advance and bebecome integrated into the markets in which we compete.

Our competitors may use their market position and financial resources to market and price their products in a way tothat dissuadedissuades customers from purchasing from us. For example, Intel Corporation (Intel) uses its microprocessor market position to price its products aggressively and target our customers and channel partners with special incentives. These aggressive activities have reduced and may reduce our unit sales and average selling prices for many of our products, adversely affecting our business. Similarly, Nvidia Corporation (Nvidia) leverages its market position in the data center GPU,GPU market, financial resources, and proprietary software ecosystem to promote its systems and influencesinfluence customers whothat do business with us. Our competitors’ business practices, including allocation strategies, pricing actions, product mix and introduction schedules, licensing terms, marketing arrangements, product bundling strategies, lack of software interoperability and business acquisitions and investments can limit customers’ ability to choose alternative products, including ours. This may limit our market share and decrease our margins and profitability, which may have a material adverse effect on our business.

In addition, strategic partnerships, acquisitions and business collaborations by and between our competitors may increase competition and adversely affect our business. For example, in September 2025, Nvidia announced a partnership and investment in Intel to partner on new data center and client platform products. This partnership may result in increased competition and pricing pressure for our products or could prevent us from participating in other opportunities, which could materially adversely impactaffect our business, financial condition and margins.

Industry-wide fluctuations in the computer marketplace have materially adversely affected us in the past and may materially adversely affect us in the future. We offer products that are used in different end markets and the demand for our products can vary among our Data Center, Client, Gaming and Embedded end markets. In our Data Center segment, we offer products that are optimized for generative AI applications and since 2024, we have experienced significant demand for our AI accelerators. The demand for such products will in part depend on the extent to which our customers utilize generative AI solutions in a wide variety of applications, and both the near-term and long-term trajectory of such generative AI solutions is unknown. Some customers in AI markets may be unable to secure access to internal and external infrastructure, including availability of sufficient data center capacity or energy for the buildout of data centers that use our products. In addition, construction delays in the scheduled buildout of data centers and unfavorable developments in public perception and evolving laws and regulations related to data centers could impact the timing of customer demand.adoption, Suchimpede delaysour ingrowth thestrategy buildout of data centersand could have a material adverse effect on our business, financial condition and future growth strategy. Customers may also lack, or be unable to, secure capital to fund their required AI infrastructure and may request alternative financing or deferred‑payment arrangements from vendors and suppliers. TheseAlso, the industry-wide memory shortage and related rising prices in memory may drive the price for data center buildouts higher. Such limitations could delay or reduce thecustomers’ demand for our products, which could negatively impact our revenue.

Although we make substantial investments in research and development, we cannot be certain that we will be able to develop, obtain or successfully implement new products and technologies on a timely basis or that they will be well-received by our customers. Our investments in new products and technologies involve certain risks and uncertainties and could disrupt our ongoing business. Failure to successfully develop increasingly advanced technologies, including our portfolio of hardware products and software tools, or monetize our products, could impact our revenue and we may incur unanticipated liabilities. We cannot be certain that our ongoing investments in new products and technologies will be successful and will result in adoption of these product offerings at the expected rate or pace or at all. For example, as part of our pervasive AI strategy, we have a portfolio of hardware products and software tools to allow our customers to develop scalable and pervasive AI solutions. We are actively building AI capabilities into our products, but there can be no assurance about the rate and pace of adoption of such product offerings. In our Data Center segment, we offer products that are optimized for generative AI applications and we have experienced significant demand for our AI accelerators. The demand for such products in part will depend on the extent to which our customers utilize generative AI solutions in a wide variety of applications as both the near-term and long-term trajectory of such generative AI solutions is unknown. If we fail to develop and timely offer or deploy such products and technologies, keep pace with the product offerings of our competitors, or adapt to unexpected changes in industry standards or disruptive technological innovation, our business could be adversely affected. Additionally, our efforts in developing new AI technology solutions are inherently risky and may not always succeed. If we are unable to execute on new products or business strategies, we may incur significant costs, resources, investments and delays and not achieve a return on investment or capitalize on the opportunities presented by demand for AI solutions. Moreover, while AI adoption is likely to continue and may accelerate, the long-term trajectory of this technological trend is uncertain.

Product transition risks may increase as the computing industry shifts toward shorter launch cycles and a broader range of accelerated computing platforms. Product transitions are complex and as such we may ship both new and prior-generation products concurrently. Customer adoption patterns can vary and while some customers may shift to newer products more quickly and reduce demand for current-generation offerings, other customers may lower their inventory of existing products before purchasing new ones. The increased frequency of product transitions and expansion of our product portfolio heightensincluding the introduction of system-level architectures, such as our “Helios” rack-scale platforms, which we develop and license for implementation by customers and their manufacturing partners and which is expected to start shipping in the second half of fiscal year 2026, heighten the challenges of managing our supply and demand,demand whichand could adversely affect our revenue and inventory management. Although we supply certain products used in Helios-based system, we do not manufacture or sell the completed Helios rack systems. The increasing frequency and complexity of our newly introduced products may also result in unanticipated quality or production issues that could result in product delays.

We also depend on a limited number of suppliers to provide the majority of certain types of IC packages for our microprocessors, including our APU products. Similarly, certain non-proprietary materials or components such as memory, printed circuit boards (PCBs), interposers, substrates and capacitors used in the manufacture of our products are currently available from only a limited number of suppliers. For example, there is currently an industry-wide memory shortage as the demand for such components has outpaced supply. The price of memory has also increased as a result of the shortage. If we are unable to procure a stable supply of memory, equipment, materials or substrates of acceptable quality on an ongoing basis and at reasonable costs to meet our production requirements, we could experience a shortage in memory, equipment, materials or substrate supply or an increase in production costs, which could have a material adverse effect on our business. Since some of the equipment and materials that we and our third-party manufacturers purchase are complex, it is sometimes difficult to substitute one supplier of equipment or materials supplier for another. Certain of our products will be deployed as part of integrated, rack-scale systems that include numerous third-party rack-level components and require rack integration and qualification. As a result, even if we are able to manufacture and deliver our products on time, if these other components necessary for the rack-scale systems are not available from third parties due to supply constraints or availability issues, our and our customers’ ability to build, deploy or expand such rack-scale systems could be delayed or reduced. Such constraints could reduce demand for, or delay shipments of our products, negatively affect our customer relationships and could materially adversely affect our business, financial condition and results of operations. We have entered and may continue to enter into long-term purchase commitments and prepayment arrangements with some of our suppliers. If the delivery of such supply is delayed or does not occur for any reason, it could materially impact our ability to procure and process the required volume of supply to meet customer demand. Conversely, if we overestimate our customer demand or experience a decrease in customer demand, either because customers cancel orders or choose to purchase from our competitors, it could result in excess inventory and an increase in our production costs, particularly since we have prepayment arrangements with certain suppliers. OurAccurately ability to accurately estimateestimating customer demand has become more challenging due to the increasing complexity of our business. We also continue to enter long-term purchase commitments in advance of demand. As a result, these risks have increased as our purchase obligations and prepayments have grown and could increase further if such obligations represent a larger portion of our total supply in the future. If we are unable to accurately estimate customer demand, it may negatively impact our business, financial condition and results of operations.

Excess or obsolete inventory havehas resulted in, and may in the future result in, write-downs of the value of our inventory. Factors that may result in excess or obsolete inventory, a reduction in the average selling price, or a reduction in our gross margin include: a sudden or significant decrease in demand for our products; a production or design defect in our products; a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements; a failure to accurately estimate customer demand for our products, including for our older products as our new products are introduced; or our competitors introducing new products or taking aggressive pricing actions.

Certain of our products will be deployed as part of integrated, rack-scale systems that include numerous third-party rack-level components and require rack integration and qualification. As a result, even if we are able to manufacture and deliver our products on time, if these other components necessary for the rack-scale systems are not available from third parties due to supply constraints or availability issues, our and our customers’ ability to build, deploy or expand such rack-scale systems could be delayed or reduced. Such constraints could reduce demand for, or delay shipments of our products, negatively affect our customer relationships and could materially adversely affect our business, financial condition and results of operations. Some failures in our products or services have been in the past and may in the future be only discovered after a product or services has been shipped or used. Further, although arrangements with component providers may contain provisions for reimbursement due to the current components failure to meet warranty, we may remain responsible to the customer for the full system and claims that may arise from the system’s failure to meet warranty obligations from time to time.

Our ability to meet customer demand for our products depends, in part, on our ability to deliver the products our customers want on a timely basis. Accordingly, we rely on our supply chain for the manufacturing, distribution and fulfillment of our products. As we continue to grow our business, expand to high-growth adjacent markets, acquire new customers and strengthen relationships with existing customers, the efficiency of our supply chain will become increasingly important because many of our customers tend to have specific requirements for particular products, geographic requirements, and specific time-framestimeframes in which they require delivery of these products. If we are unable to consistently deliver the right products to our customers on a timely basis in the right locations, our customers may reduce the quantities they order from us, which could have a material adverse effect on our business.

We market and sell our products through a global, multi-tier network of authorized distributors, resellers and OEMs. Despite programmatic controls, audits and contractual restrictions, our pricing programs may be misused, and unauthorized resellers or unauthorized resale can occur on the “gray market”. Gray market activities could result in customer satisfaction issues because any time products are purchased outside our authorized distribution channels there is a risk that our customers are buying counterfeit or substandard products, including products that may have been altered, mishandled or damaged, or that are used products represented as new. These substandard gray market products may have higher-than-expected failure rates andor aslower-than-expected performance. As a result, we may face brand protection risks, reputational harm or unauthorized warranty claims. Gray market products also result in shadow inventory that is not visible to us, making it difficult to forecast demand accurately. Also, whenWhen gray market products enter the market, we and our distribution channels compete with these heavily discounted gray market products, which adversely affects demand for our products and negatively impacts our margins. We also face risks of product diversion into restrictedmarkets markets,subject to legal or regulatory restrictions, including reexportsexports, reexports, transfers or sales to prohibitedinvolving end users/users, end uses.uses or jurisdictions restricted under applicable laws and regulations. Products acquired on the gray market or through other unauthorized channels are at higher risk of being re-sold to prohibited end-users, misused, and deployed for uses that do not align with AMD’s ethics, values or compliance standards. Despite our compliance programs and procedures for mitigating these risks through customer and transaction screening, distributor audits, law enforcement and NGO cooperation and export control compliance (including licensing where required), we may not fully eliminate these risks.

Government actions and regulationsregulations, such asincluding export controls, national-security-based regulations, import tariffs,tariffs and trade protection measures may limit our ability to export our products to certain customers.customers, increase costs, harm our competitive position and materially adversely affect our business.

Evolving U.S. government policy toward semiconductor exports, particularly in the context of national security and foreign policy priorities could adversely affect our business. U.S. regulations under the U.S. Treasury Department’s Outbound Investment Security Program impose restrictions on certain outbound investments by U.S. persons in foreign entities engaged in sensitive technologies, including semiconductors, artificial intelligence and quantum computing, and may prohibit or require notification of certain transactions, which could limit our ability to pursue or structure certain investments or partnerships. In October 2023, the Bureau of Industry and Security (BIS) of the United States Department of Commerce issued requirements for the export of certain advanced computing items to a party headquartered in, or with an ultimate parent headquartered in, any of Country Groups D1, D4 or D5, including China (a D5 Country). These controls prevent us from shipping certain AMD Instinct™ integrated circuits and certain AMD Versal™ FPGAs to China, or to customers outside of the United States who are headquartered in—or whose ultimate parent is headquartered in—a D5 Country, without a license. BIS may not timely update performance-based licensing thresholds in the 2023 export requirements and/or may issue new licensing requirements and regulatory controls in the future. Accordingly, there is a risk that new products whichthat exceed current licensing thresholds, or even those below current licensing thresholds, may not succeed because BIS could determine they are subject to licensing requirements. U.S. export restrictions on semiconductors and semiconductor technology to Chinacertain markets and Chinesecustomers, customersincluding China, negatively impact our ability to sell to these markets and customers in China and make it easier for our China-baseddomestic-based competitors to develop and sell their own solutions and reduce the need for our products. In April 2025, the U.S. government implemented a new license requirement for the export of certain semiconductor products to a D5 Country, and to companies headquartered in, or with an ultimate parent located in such D5 Country. This restriction impacts our AMD Instinct™ MI308 products. We applied for and were granted some licenses by the U.S. government that allow us to ship our MI308 products to certain China-based customers and we began shipping products at the end of fiscal 2025. As a result of the restriction, we incurred approximately $440 million of net inventory and related charges in 2025. Sales of our MI308 products into China depend on customer demand, China’s import control rules and our ability to obtain licenses. In August 2025, U.S. government officials expressed an expectation that the U.S. government will receive 15% of the revenue generated from licensed MI308 sales to China. However, to date, the U.S. government has not published a regulation establishing such requirement. Any request for a percentage of the revenue by the U.S. government could subject us to litigation, increase our costs and harm our competitive position and benefit competitors that are not subject to such arrangements. In February 2026, the U.S. government granted us some export licenses authorizing us to ship our AMD Instinct MI325 products to certain China-based customers. We do not yet know whether any imports of MI325 products will be allowed into China. Any MI325 products shipped to China are required by the terms of the licenses to first undergo an inspection process in the United States. As a result, any MI325 shipped under the licenses will be subject to a 25% tariff upon importation into the United States for the inspection.

Additional export restrictions imposed in the future may not only impact our ability to serve China but could also impact our ability to serve other markets. If any new export controls impact more of our products, we may be unable to sell our inventory of such products and we may further incur inventory and related charges since there is no assurance that the U.S. government will grant licenses at all or in a timely manner. Even if we are granted licenses, the licenses may be temporary or could impose onerous conditions for us or our customers. If we are not granted licenses, we may be unable to develop a competitive product for the China market that is not subject to licensing requirements. Limits on sales of our offerings in the China market due to export controls could impact our competitive position compared to domestic Chinese competitors and other companies or competitors not subject to the same restrictions. As such, we could lose market position and our business, operating results,results and financial condition would be adversely impacted.

The implementation or increase of any tariffs, trade protection measures or restrictions, or retaliatory actions from foreign governments could result in lost sales and adversely impact our reputation and business. The U.S. government has instituted or proposed changes in trade policies that include higher tariffs on imports into the U.S. and other government regulations affecting trade between the United States and other countries where we conduct our business. Such changes to U.S. trade policy have the potential to adversely impact the U.S. economy or sectors thereof and could significantly impact our business, in particular the import of products used in our business that are manufactured outside the U.S. Any retaliatory actions by affected countries and foreign governments could result in tariffs, trade protection measures or other restrictions imposed on our current and future products. Our customers’ costs of doing business may increase or their sales may be negatively affected. As such, customer demand for our products may decline, which could adversely impact our ability to generate revenue and result in inventory impairment changes. For instance, tariffs on hardware required for data centers could raise costs for our customers, potentially causing them to delay or cancel AI infrastructure investments. Further, to the extent that the United States, China or other countries seek to promote products that are produced domestically or reduce their dependence on products from another country, they may implement regulations or policies that may materially impact our business. For instance, the Department of Commerce's Office of Information and Communications Technology and Services (OICTS) administers an expanding U.S. supply chain program to review and restrict transactions involving certain information and communications technology and services with a nexus to foreign adversaries such as China and Russia. Emerging regulations from OICTS could limit our ability to sell or support certain products or technologies, increase compliance costs, and create uncertainty for our customers and supply chain. Additionally, in 2026 China's State Council promulgated the Regulations on the Security of Industrial and Supply Chains (Decree No. 834) and the Regulations on Countering Foreign Improper Extraterritorial Jurisdiction (Decree No. 835), which expand Chinese authorities' powers to investigate, restrict, and impose countermeasures on foreign companies that implement or assist foreign export controls, sanctions, or other measures viewed as harming China's interests or supply chains. To the extent our compliance with U.S. export controls and other restrictions causes us or our affiliates to become subject to these or similar Chinese countermeasures, we could face conflicting legal obligations, restrictions on our operations and transactions in China, supply chain disruption, and reputational harm, any of which could materially adversely affect our business, operating results, and financial condition.

The United States and other countries’ export control regulations continue to focus on targeting semiconductors associated with AI, including GPUs and associated products and services, by restricting or prohibiting their unlicensed sale or supply to U.S. embargoed or sanctioned countries, governments, persons and entities. The United States has imposed unilateral controls restricting GPUs and associated products, and is likely to further adopt other unilateral or multilateral controls. The scope and application of such controls have been and may continue to be broad, which may prohibit us from exporting or providing access to our products to customers in one or more markets, including but not limited to China, and could negatively impact our manufacturing, testing and warehousing locations, or could impose other conditions that limit our ability to meet demand abroad. If export controls targeting semiconductors associated with AI including GPUs and associated products and services are further tightened, or the classification of our products under those controls’ changes, our ability to export our technology, products or services could be further restricted. We may also be at a competitive disadvantage if our competitors are not subject to the same or similar restrictions or classifications. Such export controls have, and may in the future, subject downstream recipients of our products to additional restrictions on the use, resale, repair or transfer of our products and may have a material adverse effect on us. New export control restrictions may adversely impact the ability of our research and development teams located outside of the United States from executing our product roadmaps in a timely manner or at all. In addition, deemed export restrictions could further affect our ability to provide services or develop products in the United States. Continued changes to export control regulations that we are subject to, or changes to their interpretation and enforcement, could result in greater compliance costs and other compliance burdens on our business and our customers which could adversely impact our business.customers. Export controls have and may continue to encourage customers in China and other markets subject to those controls to pursue alternatives to U.S. semiconductors for their product designs to limit compliance burdens and potential impact on their product roadmaps. From time to time, governments provide incentives or make other investments that could benefit and give a competitive advantage to our competitors. Government incentives may not be available to us on acceptable terms or at all. If our competitors can benefit from such government incentives and we cannot, it could strengthen our competitors’ relative position and have a material adverse effect on our business.

We alsoreplaced haveour unsecured revolving credit facility in the aggregate principal amount of $3.0 billion (the Existing Credit Agreement) with an unsecured revolving credit facility in the aggregate principal amount of $3.0$5.0 billion (Revolving Credit Agreement). Our Revolving Credit Agreement contains various covenants which limit our ability to, among other things, incur liens; and consolidate or merge or sell our assets as an entirety or substantially as an entirety (in each case, except for certain customary exceptions). In addition, our Revolving Credit Agreement requires us to maintain a minimum consolidated interest coverage ratio at the end of each fiscal quarter. The agreement governing our convertible notes and our Revolving Credit Agreement contains provisions whereby a payment default or acceleration under certain agreements with respect to other material indebtedness would result in cross defaults under our convertible indenture or the Revolving Credit Agreement and allow note holders or the lenderslenders, underas our Revolving Credit Agreementapplicable, to declare alloutstanding amounts outstanding under certain of our indentures or the Revolving Credit Agreement to be immediately due and payable. If the lenders under our Revolving Credit Agreement accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay thosesuch borrowings. Also, we enter into sale and factoring arrangements from time to time with respect to certain accounts receivables, which arrangements are non-recourse to us in the event that an account debtor fails to pay for credit-related reasons and are not included in our indebtedness.

From time to time, we enter into commercial arrangements such as long-term capacity purchase agreements, financialguarantees, guaranteesleases and leasesother financing arrangements to support customers’our customer or commercial partners’partner infrastructure development.developments. These arrangements may increase our exposure to credit and to counterparty risk, suchincluding as theircounterparty’s inability to secure the necessary capital or financing, delays in project executionexecution, andbusiness downturns in their business, includingor insolvency. If we are required to satisfy our financial obligations under these commercial arrangements, our business, operating results, and financial condition may be adversely affected. Additionally, we may commit to specified levels of cloud compute capacity based on anticipated internal usage or our ability to allocate or assign such capacity. If we are unable to fully utilize or offload that capacity as expected, we could have excess capacity, increased costs or reduced operational flexibility, which could materially adversely affect our business.

We have acquired and invested in businesses, and may continue to do so, that offer products, services and technologies that we believe will help expand our product offerings and services and grow our business in response to changing technologies, customer demands and competitive pressures. Acquisitions and joint ventures include numerous risks including, but not limited to: our inability to identify suitable opportunities in a timely manner or on terms acceptable to us; failure to complete a transaction in a timely manner, or at all; inability to obtain, or delay in obtaining, regulatory approvals or IP disputes or other litigation; difficulty in obtaining financing on terms acceptable to us or at all; and failure of a transaction to advance our business strategy or other unforeseen factors. For example, in March 2025, we completed our acquisition of ZT Systems. While we believe that our acquisitions will result in certain benefits, including certain operational synergies, accretion and cost efficiencies, and drive product innovations, achieving these anticipated benefits depends on our ability to successfully integrate the acquired businesses into our business. We cannot be certain that our acquisitions can be successfully integrated with our business in a timely manner or at all, for a variety of reasons, including, but not limited to: difficulty in integrating the technology, systems, products, policies, processes or operations; retaining and integrating and retaining the employees including key personneltalent of the acquired business; diversion of capital and other resources, including management’s attention from our existing business; unanticipated costs or liabilities, such as increased interest expense and compliance with debt covenants or other obligations; coordinating and integrating in countries in which we have not previously operated; the potential impact of the acquisitions on our relationships with employees, vendors, suppliers and customers; our inability to effectively retain suppliers, vendors and customers of the acquired businesses; entry into geographic or business markets in which we have little or no experience; adverse changes in general economic conditions in regions in which we and the acquired companies operate; potential litigation associated with the acquisitions; difficulties in the assimilation of employees and culture; difficulties in managing the expanded operations of a larger and more complex company; and difficulties with integrating and upgrading our and the acquired companies’ financial reporting systems. If we cannot successfully integrate or are delayed in integrating newly acquired businesses, it could result in increased costs, decreases in expected revenues, diversion of management’s time and attention, negatively impact our ability to develop or sell new products and impair our ability to grow our business, which could materially adversely affect our financial conditions and operating results. Even if the businesses we acquire are successfully integrated, the benefits of such transactions may not be realized within the anticipated time frame or at all. To complete an acquisition, we may issue equity securities, which would dilute our stockholders’ ownership and could adversely affect the price of our common stock, and/or incur debt, assume contingent liabilities or have amortization expenses and write-downs of acquired assets, which could adversely affect our results of operations. From time to time, we may also seek to divest or wind down portions of our business, either acquired or otherwise. Such dispositions involve risks and uncertainties, including our ability to sell such businesses on terms acceptable to us, or at all; litigation; disruption of our ongoing business and distraction of management; failure to effectively transfer liabilities, contracts, facilities and employees to buyer; continued financial obligations and unanticipated liabilities; and closing delays. For example, purchase price consideration received from divestitures can be subject to customary post-closing adjustments, and if such adjustments are material, we may be exposed to losses, which could have a material impact on our financial position and results of operations.

We maintain operations around the world, including in the United States, Canada, Europe, Australia, Latin America and Asia. We rely on third-party wafer foundries in the United States, Europe and Asia. Nearly all product assembly and final testing of our products is performed at third-party operated manufacturing facilities, in the locations of Mainland China, Malaysia and Taiwan. Our shipping services are provided by third-party subcontractors. We also have international sales operations. International sales, as a percent of net revenue, were 74%70% for the three months ended MarchJune 28,27, 2026. We expect that international sales will continue to be a significant portion of total sales in the foreseeable future. The political, legal and economic risks associated with our worldwide operations include, without limitation: expropriation; changes in a specific country’s or region’s political or economic conditions; changes in tax laws, trade protection measures and import or export licensing requirements and restrictions; imposition of new and increased tariffs; worsening trade relationship between the United States and China (or other countries); volatile global economic conditions, including downturns or recessions in which some competitors may become more aggressive in their pricing practices; difficulties in protecting our intellectual property; difficulties in managing staffing and exposure to different employment practices and labor laws; changes in immigration law and regulationspolicy; changes in foreign currency exchange rates; restrictions on transfers of funds and other assets of our subsidiaries between jurisdictions; changes in freight rates; changes to macroeconomic conditions, including interest rates, inflation and recession; transportation restrictions or disruptions; loss or modification of exemptions for taxes and tariffs; and compliance with U.S. laws and regulations related to international operations, including export control and economic sanctions laws and regulations and the Foreign Corrupt Practices Act. We engage contingent workers to help support our business. Evolving labor laws and employment practices, or difficulties managing this workforce could increase costs, disrupt our operations, result in litigation penalties or other liabilities, any of which could materially adversely affect our business, financial condition and results of operations. Changes in the public perception of the U.S. government in the regions where we operate or plan to operate could also negatively impact our business and results of operations. Geopolitical tensions, such as the Ukraine-Russia, Venezuela and Middle East conflicts, could escalate and expand, which in turn could have negative impacts on the global economy and financial markets. Also, in addition to restrictions imposed by the United States or China on exports or imports from one another, geopolitical changes between China and Taiwan could disrupt the operations of our Taiwan-based third-party wafer foundries, manufacturing facilities and subcontractors, and materially adversely affect delivery of products and our business, financial condition and/or operating results.

OurIf inabilitywe are unable to continueattract, to attractdevelop and retain key employees may hinderemployees, our business.business could be materially adversely affected.

Our success depends upon theour continuedability serviceto ofattract, motivate, develop and retain numerous qualified engineering, marketing, salessales, executive and executiveother key employees. The market for qualified and skilled executives and employees in the technology industry, especially in the areas of AI and machine learning, is highly competitive. Our competitors have targeted and will continue to target individuals in our organization that have desired skills and experience. If we are unable to continue to attract, develop and retain our leadership team and our qualified employees necessary for our business, the progress of our product development programs could be hindered, and we could be materially adversely affected. We use share-based incentive awards to help attract, retain and motivate our executives and qualified employees. If the value of such stock awards does not appreciate as measured by the performance of the price of our common stock, or if our share-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain and motivate our executives and employees could be affected, which could harm our results of operations. If the value of our stock awards increases substantially, this could potentially create great personal wealth for our executives and key talent and affect our ability to retain our employees. Our ability to attract and retain qualified employees globally could also be impacted by changes in immigration law and regulations, or interpretation of new or existing laws. United States immigration controls could affect the employment status of key technical and professional employees, as well as our ability to hire talent globally.policy. Any future restructuring plans may also adversely impact our ability to attract and retain key employees.

We have an approved Repurchase Program that authorizes repurchases of up to $14 billion of our common stock. As of MarchJune 28,27, 2026, $9.2 billion remained available for future stock repurchases under the Repurchase Program. The Repurchase Program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time. Our stock repurchases could affect the trading price of our stock, the volatility of our stock price, reduce our cash reserves, and may be suspended or discontinued at any time, which may result in a decrease in our stock price.

The statements in this report include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements and should not be relied upon as predictions of future events, as we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify forward-looking statements by the use of forward-looking terminology including “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “pro forma,” “estimates,” “anticipates,” or the negative of these words and phrases, other variations of these words and phrases or comparable terminology. The forward-looking statements relate to, among other things: possible impact of future accounting rules on AMD’s condensed consolidated financial statements; demand for AMD’s products; AMD’s strategy and expected benefits; the growth, change and competitive landscape of the markets in which AMD participates; the expectation that international sales will continue to be a significant portion of total sales in the foreseeable future; the expectation that AMD’s cash, cash equivalents, short-term investments and cash flows from operations along with our revolving credit facility and our commercial paper program will be sufficient to fund AMD’s operations, capital expenditures, commitments and strategic activities over the next 12 months and beyond; AMD’s ability to access capital markets; AMD’s expectation that based on management’s current knowledge, the potential liability related to AMD’s current litigation will not have a material adverse effect on its financial positions, results of operations or cash flows; anticipated ongoing and increased costs related to enhancing and implementing information security controls; the expectation that revenue allocated to remaining performance obligations that are unsatisfied will be recognized in the next 12 months; that a small number of customers will continue to account for a substantial part of AMD’s revenue and receivables in the future; the expected implications from the development of the legal and regulatory environment relating to emerging technologies, such as AI; AMD’s expectation to utilize the cloud service capacity in its operations or assign the capacity; AMD’s ability to achieve its corporate responsibility initiatives; compliance costs associated with new or developing sustainability laws and requirements; expected future AI technology trendstrends, developments and developmentsgrowth; the expected benefits of AMD’s acquisitions; the extent of impact of export restrictions imposed by the U.S. on our business; expected shipment of the Helios rack-scale platforms; expected gain on the transfer of appreciated assets related to the acquisition of ZT Group Int’l, Inc.; AMD’s future investment commitments and commencement of future payments under data center leases; and AMD’s expectation to fund stock repurchases through cash generated from operations. For a discussion of the factors that could cause actual results to differ materially from the forward-looking statements, see “Part II, Item 1A—Risk Factors” and the “Financial Condition” section set forth in “Part I, Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or MD&A, and such other risks and uncertainties as set forth below in this report or detailed in our other Securities and Exchange Commission (SEC) reports and filings. We assume no obligation to update forward-looking statements.

In this section, we will describe the general financial condition and the results of operations of Advanced Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “we”, “us,” “our”, “AMD” or the “Company”), including a discussion of our results of operations for the three and six months ended MarchJune 28,27, 2026 compared to the prior year period and an analysis of changes in our financial condition.

Net revenue for the three months ended MarchJune 28,27, 2026 was $10.3$11.5 billion, a 38%50% increase compared to the prior year period. The increase in net revenue was driven by an increase in Data Center segment revenue primarily driven by strong demand for our 5th generation AMD EPYC™ processors and AMD Instinct™ MI350 Series GPUs, an increase in Client and Gaming segment revenue, primarily driven by strong demand for our AMD Ryzen™ processors and an increase in Embedded segment revenue as certaindemand strengthened across end market demand increased.markets.

Gross margin for the three months ended MarchJune 28,27, 2026 was 53%54% compared to gross margin of 50%40% for the prior year period, a 3%14% increase primarily driven by the absence of inventory and related charges associated with the U.S. government export control on AMD Instinct MI308 Data Center GPU products that was recorded in the prior year period and a favorable product mix, including higher Data Center segment revenue.

Operating income for the three months ended MarchJune 28,27, 2026 was $1.5$2.0 billion compared to operating incomeloss of $806$134 million for the prior year period. The increase in operating income was due to higher gross profit, partially offset by higher operating expenses. Net income for the three months ended MarchJune 28,27, 2026 was $1.4$2.3 billion compared to net income of $709$872 million for the prior year period. The increase in net income was primarily driven by higher operating income.

As of MarchJune 28,27, 2026, our cash, cash equivalents and short-term investments were $12.3$13.1 billion compared to $10.6 billion as of December 27, 2025. During the threesix months ended MarchJune 28,27, 2026, we generated $3.0$5.3 billion of cash from operating activities and we returned $221 million to stockholders through the repurchase of common stock under our stock repurchase program (Repurchase Program).

In October 2025 and February 2026, we amendedentered ainto mastermulti-year purchase agreementagreements with OpenAI OpCo, LLC (OpenAI) and Meta Platforms, Inc. (Meta), andrespectively, Metaunder agreedwhich each customer intends to deploy up to 6 gigawatts of AMD data center GPUs, with the first gigawatt of capacityeach deployment powered by customour AMD Instinct MI450-basedMI450 GPUseries andproducts. 6thIn Gen AMD EPYC™ CPUs. Concurrentconnection with thethese agreement,agreements, we issued toeach Metacustomer a warrant to purchase up to 160 million shares of AMD’sour common stock at an exercise price of $0.01 per share.share, The warrant will vestvesting in tranches basedtied onto AMD Instinct GPU purchase milestones by Meta, or its affiliates, or indirectly through authorized third parties and achievement of specified AMD stock price targets.and/or Eachperformance vested tranche is further subject to the fulfillment of certain other technical and commercial conditions by Meta prior to exercisability. The warrant is exercisable through February 23, 2031.conditions. As of MarchJune 28,27, 2026, none of theno warrant sharestranches had vested or become exercisable, and the warrantwarrants had no impact on our Condensed Consolidated Financial Statementsresults for the three and six months thenended ended.June 27, 2026.

There have been no significant changes for the three and six months ended MarchJune 28,27, 2026 to the items that we disclosed as our critical accounting estimates in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the fiscal year ended December 27, 2025.

Data Center net revenue of $5.8$6.7 billion for the three months ended MarchJune 28,27, 2026 increased by 57%,107%, compared to net revenue of $3.7$3.2 billion for the prior year period. Data Center net revenue of $12.5 billion for the six months ended June 27, 2026 increased by 81%, compared to net revenue of $6.9 billion for the prior year period. The increase in both periods was primarily driven by strong demand for our 5th generation AMD EPYC™ processors and AMD Instinct™ MI350 Series GPUs.

Data Center operating income was $1.6$2.1 billion for the three months ended MarchJune 28,27, 2026, compared to operating loss of $155 million for the prior year period. Data Center operating income was $3.7 billion for the six months ended June 27, 2026, compared to operating income of $932$777 million for the prior year period. The increase in operating income in both periods was primarily driven by higher revenue,revenue and the absence of inventory and related charges associated with the U.S. government export control on AMD Instinct MI308 Data Center GPU products that was recorded in the prior year period, partially offset by higher cost of sales and operating expenses.

EmbeddedClient and Gaming net revenue of $873$3.8 millionbillion for the three months ended MarchJune 28,27, 2026 increased by 6%, compared to net revenue of $823$3.6 millionbillion for the prior year period. NetClient and Gaming net revenue of $7.4 billion for the six months ended June 27, 2026 increased asby demand13%, strengthenedcompared acrossto severalnet endrevenue markets.of $6.6 billion for the prior year period.

EmbeddedClient and Gaming operating income was $338$582 million for the three months ended MarchJune 28,27, 2026, compared to operating income of $328$767 million for the prior year period. Client and Gaming operating income was $1.2 billion for the six months ended June 27, 2026, compared to operating income of $1.3 billion for the prior year period. The increasedecrease in operating income in both periods was primarily drivendue byto higher revenue, partially offset by higher cost of sales and operating expenses.

All Other operating loss of $1.1 billion for the three months ended June 27, 2026 primarily consisted of $544 million of amortization of acquisition-related intangibles and $503 million of stock-based compensation expense. All Other operating loss of $1.0 billion for the three months ended MarchJune 28, 20262025 primarily consisted of $551$568 million of amortization of acquisition-related intangibles and $487$369 million of stock-based compensation expense. All Other operating loss of $950 million for the three months ended March 29, 2025 primarily consisted of $567 million of amortization of acquisition-related intangibles and $364 million of stock-based compensation expense.

International salessales, asbased aon percentagebilling location of customers who purchased directly from us, were 70% and 71% of net revenue were 74% and 66% for the three months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, respectively, and 72% and 69% of net revenue for the six months ended June 27, 2026 and June 28, 2025, respectively. We expect that international sales will continue to be a significant portion of total sales in the foreseeable future. Substantially all of our sales transactions were denominated in U.S. dollars.

Gross margin was 53%54% and 50%40% for the three months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, respectively. Gross margin was 53% and 45% for the six months ended June 27, 2026 and June 28, 2025, respectively. The increase in grossboth marginperiods was primarilydriven dueby tothe absence of inventory and related charges associated with the U.S. government export control on AMD Instinct MI308 Data Center GPU products that was recorded in the prior year period and a favorable product mix, including higher Data Center segment revenue.

Research and Development (R&D) Expenses

Research and developmentR&D expenses of $2.4$2.5 billion for the three months ended MarchJune 28,27, 2026 increased by $669$0.6 million,billion, or 39%,33%, compared to $1.7$1.9 billion for the prior year period. R&D expenses of $4.9 billion for the six months ended June 27, 2026 increased by $1.3 billion, or 36%, compared to $3.6 billion for the prior year period. The increase in both periods was primarily due to higher employee-related costs from an increase in headcount in support of our continued focus on our AI strategy and long-term growth opportunities.

Marketing, General and Administrative (MG&A) Expenses

Marketing, general and administrativeMG&A expenses of $1.3$1.4 billion for the three months ended MarchJune 28,27, 2026 increased by $367$0.4 million,billion, or 41%, compared to $886$1.0 millionbillion for the prior year period. MG&A expenses of $2.7 billion for the six months ended June 27, 2026 increased by $0.8 billion, or 41%, compared to $1.9 billion for the prior year period. The increase in both periods was primarily due to an increase in go‑to‑market activities to support our revenue growth.

Amortization of acquisition-related intangibles of $551$544 million for the three months ended MarchJune 28,27, 2026 decreased by $16$24 million, or 3%,4%, compared to $567$568 million for the prior year period. Amortization of acquisition-related intangibles of $1,095 million for the six months ended June 27, 2026 decreased by $40 million, or 4%, compared to $1,135 million for the prior year period. The decrease in both periods was primarily due to certain acquisition-related intangibles that were fully amortized in the prior fiscal year.

Interest expense for the three and six months ended MarchJune 28,27, 2026 and March 29, 2025 was $37 million and $20$74 million, respectively. Interest expense for the three and six months ended June 28, 2025 was $38 million and $58 million, respectively. The decrease for the three month period was primarily due to the absence of commercial paper borrowings. The increase for the six month period was due to the issuance of $1.5 billion in aggregate principal amount of our 4.212% Senior Notes due 2026 (4.212% Notes) and 4.319% Senior Notes due 2028 (4.319% Notes) on March 24, 2025.

Other income (expense), net primarily consists of interest incomeincome, gains and losses from short-term investments, changes in valuation of long-term investments, and foreign currency transaction gains and losses.

Other income (expense), net for the three months ended MarchJune 28,27, 2026 was $165$598 million, an increase of $126$500 million, or 323%,510%, compared to $39$98 million for the prior year period. Other income (expense), net for the six months ended June 27, 2026 was $763 million, an increase of $626 million, or 457%, compared to $137 million for the prior year period. The increase in both periods was primarily duedriven toby unrealized gains from long-termthe investmentspublic andmarket interestlisting incomeof fromnon-marketable short-termequity investments.securities during the second quarter of fiscal year 2026.

For the three and six months ended MarchJune 28,27, 2026, we recorded an income tax provision from continuing operations of $238$252 million and $490 million representing an effective tax rate of 14.8%.9.8% and 11.8%, respectively. The difference between the U.S. federal statutory tax rate of 21% and our estimated annual effective tax rate was primarily due to the income tax benefit from foreign-derived deduction eligible income (FDDEI), formerly FDII, and research and development (R&D) tax credits.

Net income (loss) from discontinued operations for the three and six months ended MarchJune 28,27, 2026 of $11$(8) million and $3 million included measurementtax periodprovision adjustments related to the ZT Systems acquisition and post-close adjustments related to the sale of the ZT Manufacturing business.adjustments.

As of MarchJune 28,27, 2026 and December 27, 2025, our cash, cash equivalents and short-term investments were $12.3$13.1 billion and $10.6 billion, respectively.

Our operating, investing and financing activities for the threesix months ended MarchJune 28,27, 2026 compared to the prior year period are as described below:

We have $5.0 billion available under an unsecured revolving credit facility that expires in 2031. We also have a commercial paper program to issue unsecured commercial paper notes up to a maximum principal amount outstanding, at any time, of $3.0$5.5 billion, with a maturity of up to 397 days from the date of issue. We had no commercial paper and revolving credit amounts outstanding as of MarchJune 28,27, 2026.

As of MarchJune 28,27, 2026, we had unconditional commitments of approximately $25.7$30.3 billion, of which $18.3$17.4 billion are for the remainder of fiscal year 2026. Our contractual obligations and purchase commitments relate primarily to our obligations to purchase wafers, substrates and components from third parties and future payments related to multi-year cloud service provider arrangements, and certain software and technology licenses. We work continually with our suppliers and partners on the timing of payments and deliveries of purchase commitments, taking into account business conditions. We also have commitments for leases that have commenced for approximately $805$1.2 millionbillion and leases that have not yet commenced for $4.4$4.5 billion. In addition, as of MarchJune 28,27, 2026, we providedhave data center lease guarantees with maximum potential amount of future payments of $4.1 billion. ForSubsequent additionalto informationJune on27, 2026, we entered into investment commitments of up to $5.0 billion, subject to certain conditions, which are expected to be made through fiscal year 2028 and long-term data center leases with aggregate future payments of $9.5 billion over lease guaranteesterms of up to 16 years that are expected to commence in 2027 and commitments, refer to Notes 8 and 10 of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q).2028.

Net cash provided by operating activities of continuing operations was $3.0$5.3 billion in the threesix months ended MarchJune 28,27, 2026, primarily due to our net income of $1.4$3.7 billion, adjusted for non-cash and non-operating charges of $1.1$1.9 billion and net cash inflowsoutflows of $456$274 million from changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities included a $713$966 million increase in accrued and other liabilities driven primarily by higher customer-related accruals and a $280 million reduction in accounts receivable driven primarily by customerhigher payments, partially offset byrevenue, a $308$1.0 millionbillion increase in prepaid expenses and other assets primarily bydue to prepayments of supply agreements.agreements, partially offset by a $2.2 billion increase in accounts payable primarily due to timing of payment obligations.

Net cash provided by operating activities of continuing operations was $939$2.4 millionbillion in the threesix months ended MarchJune 29,28, 2025, primarily due to our net income of $709$1.6 million,billion, adjusted for non-cash and non-operating charges of $1.0$1.2 billion and net cash outflows of $700$284 million from changes in our operating assets and liabilities. The primary drivers of the change in operating assets and liabilities were a $748$1.1 millionbillion decrease in accounts receivable due to higher receipts of customer payments,payments and a $682$943 million increase in inventory primarily to support the continued ramp of Client and Data Center products in advanced process technology nodes. Net cash provided by operating activities of ZT Systems' data center infrastructure manufacturing business (ZT Manufacturing Business), classified as discontinued operations, was $549 million.

Net cash used in investing activities of continuing operations was $2.6$5.2 billion for the threesix months ended MarchJune 28,27, 2026, which primarily consisted of purchases of short-term investments of $2.5$4.6 billion, purchases of property and equipment of $389$1.2 million,billion, and purchases of long-term investments of $409$844 million, partially offset by $778$1.6 millionbillion of proceeds from the maturity and sale of short-term investments. Net cash used in investing activities of discontinued operations was $243 million, which represents payment for customary net working capital adjustments related to the divestiture of the ZT Manufacturing Business.

Net cash used in investing activities of continuing operations was $357$2.6 millionbillion for the threesix months ended MarchJune 29,28, 2025, which primarily consisted of cash used in acquisitions of $1.7 billion, the purchases of short-term investments of $304$796 million, purchases of strategic investments of $239$358 million, and purchases of property and equipment of $212$494 million, partially offset by $398$731 million of proceeds from the maturity and sale of short-term investments. Net cash used in investing activities of the ZT Manufacturing Business, classified as discontinued operations, was $22 million due to purchases of equipment.

Net cash used in financing activities of continuing operations was $350$365 million for the threesix months ended MarchJune 28,27, 2026, which primarily consisted of stock repurchases of $221 million and stock repurchases for tax withholding on employee equity plans of $134$341 million, partially offset by proceeds from the issuance of common stock through employee equity plans of $205 million.

Net cash provided by financing activities of continuing operations was $1.7$347 billionmillion for the threesix months ended MarchJune 29,28, 2025, which primarily consisted of cash received from the issuance of senior notes forof $1.5 billion and commercial$950 papermillion of $950commercial million,paper, partially offset by stock repurchases of $749$1.2 millionbillion. andThere stockwas repurchasesno net cash provided by financing activities of discontinued operations for taxthe withholdingsix onmonths employeeended equityJune plans28, of $30 million.2025.