Nasdaq-100® Inside the Index: Advanced Micro Devices (AMD)
Key Figures
- $11.5B - Revenue (Q2 2026)
- 54% - Gross margin (Q2 2026)
- $1.56B - Free cash flow (Q2 2026)
- ~$13B - Revenue guide (Q3 2026)
- ~48.3x - Forward P/E (October 20, 2026)
Nasdaq-100 Inside the Index | Vol. 1 | Issue 32 | Data as of October 20, 2026
AMD designs chips for PCs, game consoles and servers. Data centers brought in 58% of its sales in Q2 2026.
AMD | Technology | Nasdaq-100 Index Constituent
This Issue — AMD
Advanced Micro Devices, a current Nasdaq-100 constituent at approximately 3.79% index weight as of October 20, 2026, designs processors and pays outside chip factories to make them. It reports three segments: Data Center, Client and Gaming, and Embedded. The company is based in Santa Clara, California, employs about 31,000 people and is led by CEO Lisa Su.
Business Model & Revenue Drivers
Where AMD's Revenue Comes From
AMD designs computer chips and pays outside factories, mainly Taiwan Semiconductor Manufacturing Co. (TSMC), to build them, per Bloomberg research. Most of its sales now come from chips that go inside data centers. Its server processors are sold as EPYC, and its AI chips as Instinct. In Q2 2026, ended June 27, those brought in $6.72B of AMD's $11.54B in revenue, per company filings.
The rest comes from things people use every day. AMD designs the Ryzen chips in many desktops and laptops, plus custom chips for game console makers, a business it reports as Client and Gaming. A smaller unit, Embedded, sells chips for robots and factory machines, per company filings.
Share of revenue by segment in Q2 2026: Data Center 58%; Client and Gaming 33%.
Competitive Moat
Processors, AI Chips and the Software to Program Them
Two kinds of chips do much of the work in a data center. Processors, or CPUs, handle everyday computing, and GPUs do the heavy math behind AI. AMD sells both, plus open software called ROCm that developers use to write programs for its GPUs. It spent $2.53B on research and development in Q2 2026, up from $1.89B a year earlier, per company filings.
According to company filings and Bloomberg research, that research spending and a lineup covering both chip types and the software to program them may contribute to AMD's competitive positioning.
Segment operating income in Q2 2026: Data Center $2.10B; Client and Gaming $0.58B.
Operating Strengths
Three Operating Measures
- +107% Data Center growth in Q2 2026. Data Center revenue more than doubled from $3.24B a year earlier, on demand for EPYC processors and Instinct GPUs, per company filings.
- $6.72B Data Center revenue in Q2 2026. That is 58% of AMD's $11.54B in quarterly revenue, from EPYC server processors and Instinct AI chips, per company filings.
- +51% PC chip growth in FY2025. Client revenue, mostly Ryzen PC chips, rose to $10.6B. AMD shipped 15% more processors at a 31% higher average price, per the FY2025 Form 10-K.
Growth Catalysts
Rack-Scale AI Systems and New Server Chips
Helios is a ready-built server cabinet that holds AMD's AI chips, processors and networking, wired together and sold as one system. In Q2 2026, Anthropic and AMD announced an agreement to deploy up to 2 gigawatts of MI450 AI chips in Helios racks, a figure measured by the power the chips draw, per company disclosures.
- Server processors. 6th Gen EPYC processors, code-named Venice, are in production, with a follow-on, Verano, expected in 2027, per Bloomberg research.
- AI that stays on site. The MI440X is designed for smaller corporate data centers, where companies run AI on their own hardware and keep data inside their own facilities, per Bloomberg research.
- World Labs. In September 2026, AMD agreed to acquire World Labs, the AI startup founded by Fei-Fei Li, for $8.2B in stock; the deal is expected to close by year-end, subject to regulatory approval, per Bloomberg research.
Historical Context
Revenue, FY2020 to FY2025
Revenue rose from $9.76B in FY2020 to $23.6B in FY2022, dipped to $22.7B in FY2023 during a downturn in Gaming and Embedded, then reached $25.8B in FY2024 on Data Center sales, per Bloomberg research. FY2025 revenue rose 34% to $34.6B, led by Data Center and Client and Gaming, per the FY2025 Form 10-K.
Average annual revenue growth, FY2020 to FY2024: approximately 27%.
Adjusted gross margin, FY2020 to FY2024: 45% to 53%, an increase of 8 points.
Adjusted earnings per share, FY2020 to FY2024: $1.29 to $3.31, or 2.6 times.
Free cash flow, FY2022 to FY2025: $3.10B to $5.52B, an increase of 78%.
AMD built its business selling chips. With Helios, it also sells the cabinet they go in.
Valuation & Market Expectations
Earnings Multiple and Consensus Estimates
At about $547 on October 20, 2026, the shares trade at approximately 48.3 times forward earnings, based on Bloomberg consensus estimates for the next twelve months. AMD does not pay a dividend, per Bloomberg research.
FY2027 revenue is expected to reach $88.67B, up from $51.11B expected for FY2026, based on Bloomberg consensus estimates. At approximately 48.3 times forward earnings, the market valuation reflects expectations regarding future growth in server processors and AI GPUs.
Key Risks
What Could Change the Story
- Competition. AMD competes with Nvidia in AI accelerators, and its growth plans depend on winning large customers in that market, per Bloomberg research.
- Product timing. Its target of more than 35% average annual revenue growth may depend on MI450 and Helios shipping on schedule from the second half of 2026, per Bloomberg research.
- Export rules. U.S. export controls on its MI308 data center GPUs led to $800M in inventory and related charges in Q2 2025, per company disclosures.
- Gaming. Gaming revenue fell about 31% year over year in Q2 2026, on lower console chip sales and higher memory costs, per company filings and Bloomberg research.
- Supply. AMD relies on outside manufacturers, mainly TSMC, so limits on their capacity could delay its shipments, per company filings.
What This Means For You
The Index Angle, in Plain Terms
In Your Index Fund — If you hold a fund that tracks the Nasdaq-100 Index®, you already own this.
- Index composition follows transparent eligibility criteria, and AMD is a current constituent at approximately 3.79% index weight as of October 20, 2026: about $3.79 of every $100 tracking the Nasdaq-100 sits in AMD.
- If your laptop has an AMD Ryzen sticker, AMD designed the processor inside it.
- If you play on a game console, its main chip may be a custom AMD design; AMD builds chips for console makers, per company filings and Bloomberg research.
Decoding the Jargon
Two terms doing the heavy lifting in this issue.
- GPU. A chip that runs thousands of calculations at once, used to train and run AI models; AMD sells them under the Instinct name.
- Forward P/E. Share price divided by expected earnings per share for the next twelve months; at approximately 48.3 times, the price is about 48 times those earnings.
Bottom Line
Inside the Nasdaq-100, AMD's Ryzen chips run everyday PCs. Looking ahead, a key development is the planned shipment of its MI450 AI chips.
About the Series
The Nasdaq-100® is a globally recognized index of 100 of the most innovative large cap companies listed on the Nasdaq Stock Market®. The Inside the Index series profiles one constituent each issue, from software to soft drinks and computer chips to potato chips, exploring what makes each business distinctive and the metrics investors should know.
Sources
Nasdaq Global Indexes.
AMD SEC filings via SEC EDGAR: Form 10-K annual reports; Form 10-Q quarterly reports; FY2025 Form 10-K for the fiscal year ended December 27, 2025; Q2 2026 Form 10-Q for the quarter ended June 27, 2026; Q2 2026 earnings presentation dated August 4, 2026; AMD Investor Relations filings archive.
Bloomberg research and Bloomberg consensus estimates.
Revenue, gross margin, free cash flow and Q3 2026 revenue guide per company disclosures; forward P/E per Bloomberg research. Fiscal years end on the last Saturday in December. Data as of October 20, 2026.
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