AMD(AMD.US) Phone Meeting: The server CPU market is expected to grow by more than 35%, with CPU ratio reaching 1:1, and shipments of Meta chips expected in the second half of the year.

The demand for intelligent AI is driving the need for server CPUs, and AMD expects the server CPU market to double. After the market on May 5th, AMD reported its performance for the first quarter of fiscal year 2026, with revenue reaching a record $10.3 billion, a year-on-year increase of 38%, exceeding guidance. Gross margin rose to 55%, with EPS increasing by 43% year-on-year to $1.37, and free cash flow more than tripled, reaching a record $2.6 billion. Revenue for the second quarter is expected to be around $11.2 billion, a year-on-year increase of about 46%, higher than market expectations. AMD Chairman and CEO Lisa Su set the tone for these strong results at the beginning: "These results mark a clear inflection point in our growth trajectory and a structural shift in our business. The data center is now the main DRIVE for our revenue and profit growth." The explosion of demand in intelligent AI is expected to drive the server CPU market to double The most anticipated incremental information from AMD is the significant increase in the overall addressable market (TAM). In November last year, AMD forecasted a compound annual growth rate (CAGR) of about 18% for the server CPU market over the next three to five years. However, during this conference call, this expectation was doubled. Lisa Su, AMD's Chairman and CEO, expects the total addressable market (TAM) for server CPUs to grow at a rate of over 35% per year, surpassing $120 billion by 2030. Su pointed out: "Given the expansion of inference and agent-based AI workloads, the computational power required by CPUs far exceeds previous expectations - these tasks require not only GPUs and accelerators, but also a large number of CPUs for task scheduling, data movement, and parallel execution." Su mentioned during the conference call that the company divides the sources of CPU demand into three categories: general computing, CPUs serving as GPU head nodes, and CPUs serving agent-based AI workflows. Among these, the fastest growing category is the third one. She noted that in AI infrastructure deployments, the ratio of CPUs to GPUs is shifting from the previous 1:4 or 1:8 to closer to 1:1, and in some high-density agent scenarios, the number of CPUs may even exceed GPUs. Su stated: "In the past, CPUs primarily existed as host nodes for GPUs. Now, customers are planning not only to purchase accelerators, but also to plan the long-term capacity of CPUs simultaneously." Regarding the competitive landscape and supply chain questions, Su mentioned that different architecture products will coexist in the market and large cloud providers will mix x86 and ARM solutions based on the specific workload characteristics. She emphasized that AMD's differentiation advantage lies in having a complete CPU product matrix covering throughput optimization, energy efficiency optimization, cost optimization, and AI infrastructure optimization, including the upcoming EPYC CPU "Verano" designed specifically for AI infrastructure. In terms of the supply chain, Su acknowledged that the overall supply chain is tight, but the company has established deep partnerships with foundries and backend packaging partners and is actively expanding production capacity. The conference call transcript for AMD's first quarter of 2026 is translated here.