On Tuesday, Advanced Micro Devices, Inc. (NASDAQ: AMD) said stronger-than-expected demand has tightened the server CPU supply chain, but CEO Lisa Su expects conditions to improve in 2027.
AMD Says Unexpected Demand Tightened Server CPU Supply
During AMD's second-quarter 2026 earnings call, Morgan Stanley analyst Joseph Moore asked if the company was currently constrained by server CPU supply and whether the tight market could continue into next year.
Su said the server CPU supply chain has remained constrained during the first half of 2026, largely due to demand exceeding earlier expectations.
"The server CPU supply chain is tight right now," Su said, adding that the situation had been challenging because "much of this demand was unforecasted."
Lisa Su Expects Server CPU Supply to Improve in 2027
Looking ahead, Su said AMD has gained better visibility into expected demand, which should allow the company and its supply partners to plan capacity more effectively.
"As we get into 2027, the demand is better forecasted," she said. "We would expect that the 2027 server supply situation should be better than 2026."
AMD Sees Potential for Growth Above 70%
Su said AMD feels "very good" about its ability to meet expectations for more than "70% year-over-year growth" in its server CPU business.
She also indicated that the growth outlook could improve further as the company moves through the coming quarters.
"Depending on how things play out, there may be opportunities for that growth to go higher," Su said.
In July, it was reported that Intel Corp (NASDAQ: INTC) and AMD are entering long-term server CPU supply agreements with Chinese customers as rising demand drives prices higher.
Many of these deals reportedly involve one-year supply commitments.
AMD Gains Server CPU Share
CPU shortages from Intel and AMD worsened in the first half of this year, adding pressure on PC and server makers already facing tight memory supplies.
Since early 2026, companies including Tesla Inc. (NASDAQ: TSLA) and Apple Inc. (NASDAQ: AAPL) have warned about DRAM shortages impacting production, with Apple flagging potential iPhone margin pressure and Micron Technology Inc. (NASDAQ: MU) calling the supply situation "extremely severe."
In May, Counterpoint Research analyst Neil Shah said Intel's supply constraints helped AMD gain server CPU share and potentially overtake Intel in x86 server processors.
AMD Beats Earnings Expectations With Strong Q3 Guidance
AMD reported second-quarter revenue of $11.54 billion, beating Wall Street's forecast of $11.28 billion. Adjusted earnings reached $1.66 per share, ahead of analysts' estimate of $1.61 per share.
The company also delivered a stronger-than-expected third-quarter outlook, projecting revenue of about $13 billion, plus or minus $300 million, compared with analyst expectations of $12.52 billion.
AMD expects adjusted gross margin to remain around 56% in the third quarter, matching the level reported in the second quarter.
Price Action: AMD shares ended Tuesday's regular session 7% higher at $518.58 before sliding 8.8% to $472.94 in after-hours trading, according to Benzinga Pro.
Benzinga Edge Rankings place AMD in the 98th percentile for Momentum. Although the stock is facing short-term downward pressure, its medium- and long-term price trends remain positive.