AMD Profit Margins Explained: What AMD Keeps per Dollar

A company can sell more than ever and still leave its shareholders unhappy. What they own is a share of the profit, and profit depends on how much of each sale the company keeps. Two chipmakers can each sell a billion dollars of chips and end the quarter with very different amounts once the factory bill, the engineers and the tax bill have been paid.

The trouble is that "how much it keeps" has several answers. A company reports what is left after the cost of making its products, again after its running costs, and again after everything. It often gives each figure twice, under standard accounting and on its own adjusted basis. A one-off charge in last year's numbers can then make this year's gain look far larger than it is, so the same quarter can read as a small step or a turnaround, depending on the figure a headline picks.

Profit margins sort this out by stage. Each margin is a percentage of revenue measured at a different line of the income statement, so reading them in order shows where the money goes between a sale and a profit. Investors watch them because they show whether a company can raise its prices faster than its costs, and because a share price is priced on profits in the end.

AMD's margins are a live question in October 2026. Its shares closed at a record $649.42 on October 6, 2026 (source: Yahoo Finance, AMD price history). AMD reports its third-quarter results on November 3, when investors will see whether its margins kept pace with its sales.

What are AMD's profit margins?

AMD's profit margins are the shares of its revenue left at each stage of its income statement. In the quarter ended June 27, 2026, AMD kept 54% of its revenue after production costs under standard accounting, or 56% on its adjusted basis, and 17% or 27% after its operating costs (source: AMD Q2 2026 results).

Each margin answers a narrower question than the one before it. Gross margin is revenue minus the cost of making the products sold, divided by revenue. In that quarter AMD's revenue was $11.5 billion and its total cost of sales was $5.3 billion, which left $6.2 billion of gross profit, or 54% of revenue (source: AMD Q2 2026 results). That is the share left to pay for everything else the company does.

Operating margin then takes away the costs of running the business. These are research and development (R&D), marketing and administration, and the write-off of intangible assets bought with past deals. Those operating expenses came to $4.2 billion, so AMD's operating income was $2.0 billion, a 17% operating margin (source: AMD Q2 2026 results). Net margin goes one step further, after interest, other income and tax. AMD's net income was $2.3 billion, about 20% of revenue, worked out. It was higher than operating income, because gains on AMD's investments landed after the operating line that quarter (source: AMD Q2 2026 results).

Every figure comes in two versions. GAAP stands for generally accepted accounting principles, the US rules every listed company reports under. Non-GAAP figures are AMD's adjusted version. They leave out items such as stock-based compensation, meaning pay given to staff in shares, and the write-off of intangible assets from past deals (source: AMD Q2 2026 results). AMD's guidance is given on the non-GAAP basis, which is why most headlines quote it.

Taken in order down the income statement, the three margins show where AMD's money goes. Of each dollar AMD sold in that quarter, it kept about 54 cents after making the chips and about 17 cents after running the company.

AMD gross margin: The GAAP and non-GAAP figures

AMD's gross margin was 54% under GAAP and 56% on its non-GAAP basis in the second quarter of 2026, and AMD guided the third quarter to about 56% non-GAAP. The gap of about 2.5 points comes mostly from amortization, the gradual write-off of technology and other intangible assets AMD gained by buying other companies (source: AMD Q2 2026 results).

You can rebuild the adjusted figure from AMD's own reconciliation. Start with GAAP gross profit of $6,203 million. Add back $260 million of amortization charged to cost of sales, $8 million of stock-based compensation and a $17 million provision for legal matters, and you reach non-GAAP gross profit of $6,488 million (source: AMD Q2 2026 results). Divided by revenue of $11,536 million, that is a gross margin of 56.2%, worked out, against 53.8% under GAAP.

Most of that difference traces back to past deals. When AMD buys a company, part of the price is booked as intangible assets such as designs and customer ties. That value is then charged against profit over several years. The cost is real, though it says little about what each new chip costs to make, so AMD sets it aside in its adjusted figures.

That is also the figure to hold the guide against. For the third quarter of 2026, AMD expects revenue of about $13 billion, plus or minus $300 million, and a non-GAAP gross margin of about 56% (source: AMD Q2 2026 results). The guide keeps the margin flat while revenue grows about 13% from one quarter to the next. AMD met its last guide exactly. In May it had guided the second quarter to about 56% (source: AMD Q1 2026 results). It then reported 56%.

One future item could pull the reported line down. AMD's report for the quarter ended September 27, 2025 says the value of the warrant it gave OpenAI will come off revenue as the related sales are booked (source: AMD Form 10-Q, Q3 2025). With the cost of those chips unchanged, the margin on those sales would be thinner. That warrant covers up to 160 million new shares, which is why it also matters for AMD's share count (source: AMD Form 10-Q, Q2 2026).

Why AMD's gross margin rose so much in a year

AMD's non-GAAP gross margin rose from 43% in the June 2025 quarter to 56% a year later (source: AMD Q2 2026 results). Most of the jump is the base: that quarter carried about $800 million of charges for MI308 chips hit by US export controls, and without them it would have been about 54% (source: AMD Q2 2025 results).

The MI308 is an Instinct AI chip that AMD ships to customers in China under US export licenses (source: AMD Form 10-K, fiscal 2025). When the export controls hit, AMD booked inventory and related charges in that quarter's cost of sales. That pulled its gross margin down to 43% on the adjusted basis and 40% under GAAP (source: AMD Q2 2025 results). Measured from AMD's own figure without those charges, the margin rose about 2 points in a year. Jean Hu, AMD's chief financial officer, described the second quarter of 2026 the same way, as "up over 200 basis points year-over-year" (source: AMD Q2 2026 earnings call). A basis point is one hundredth of a percentage point, so 200 basis points are 2 points.

The same effect then ran the other way. In the fourth quarter of 2025, AMD released about $360 million of the reserve it had set aside. It also sold about $390 million of MI308 chips into China. Its non-GAAP gross margin was 57%, and AMD said it would have been about 55% without those two items (source: AMD Q4 2025 results). The fall to 55% in early 2026 was that base effect unwinding, and that reported 55% equals the fourth quarter's figure without those items (source: AMD Q1 2026 results). AMD's guide for the first quarter had included about $100 million of MI308 sales to China (source: AMD Q4 2025 results).

Leaving out the MI308 items AMD put a figure on in each quarter's results, the line is steady: about 54%, then 54%, 55%, 55% and 56%. AMD's quarterly report credits the rest of the rise to "a favorable product mix, including higher Data Center segment revenue" (source: AMD Form 10-Q, Q2 2026). Checking the base before trusting a margin jump is one of the habits in what moves AMD's stock price. For AMD in 2025 and 2026, it changes the story.

AMD operating margin by segment

AMD's operating margin by segment was about 31% in Data Center, 15% in Client and Gaming and 40% in Embedded in the second quarter of 2026, worked out from each segment's income and revenue (source: AMD Form 10-Q, Q2 2026). All three exclude about $1.1 billion of costs AMD charges to no segment (source: AMD Form 10-Q, Q2 2026).

AMD reports three segments. Data Center sells EPYC server chips and Instinct AI accelerators. Client and Gaming sells Ryzen PC chips, graphics cards and console chips, and Embedded sells chips that are built into other equipment (source: AMD Form 10-Q, Q2 2026). The method is the same for each. Data Center earned $2,103 million of operating income on $6,718 million of revenue, so it kept about 31% of its sales. Client and Gaming earned $582 million on $3,841 million, about 15%, and Embedded earned $386 million on $977 million, about 40%, all worked out (source: AMD Form 10-Q, Q2 2026).

Added together, the segments earned $3,071 million, about 27% of AMD's revenue. AMD's own operating income was only $1,990 million, or 17%, because of a category called All Other, which cost $1,081 million that quarter. It mostly holds $544 million of amortization from past deals and $503 million of stock-based pay. AMD's management leaves these costs out when it judges each segment (source: AMD Form 10-Q, Q2 2026).

The segments also moved in different directions over the year. Data Center went from an operating loss of $155 million, the quarter of the MI308 charges, to $2.1 billion of profit. Embedded rose from about 33% to about 40%. Client and Gaming fell from about 21% to about 15%, worked out, and the filing puts that drop down to higher operating expenses (source: AMD Form 10-Q, Q2 2026). Because Data Center already brings in more than half of AMD's revenue, its margin does more than any other to set the company's.

How much AMD spends on research and development

AMD spent $2.5 billion on research and development in the second quarter of 2026, about 22% of its revenue, worked out. R&D is the largest cost between gross profit and operating profit (source: AMD Q2 2026 results). The filing says the spending rose 33% from a year earlier, mostly from hiring for AMD's AI plans (source: AMD Form 10-Q, Q2 2026).

R&D intensity, the share of revenue a company spends on research, is a plain way to see how much of each sales dollar goes into future products. AMD's has been falling, even as the dollar amount climbs. It was 25.9% in 2023, 25.0% in 2024 and 23.4% in 2025, worked out from AMD's yearly figures (source: AMD Form 10-K, fiscal 2025). It was then 21.9% in the second quarter of 2026, against 24.6% a year before (source: AMD Q2 2026 results).

The share falls because revenue is growing faster than the research budget, up 50% against 33% in the latest quarter (source: AMD Q2 2026 results). This is called operating leverage. When sales grow faster than costs that stay roughly fixed, more of each extra dollar reaches operating income. Between the first and second quarters of 2026, AMD's revenue rose 13% while its R&D rose about 5%, and its adjusted operating margin went from 25% to 27% (source: AMD Q2 2026 results).

For scale, Nvidia spent $7.1 billion on R&D in its quarter ended July 26, 2026. That is about 2.8 times AMD's sum, yet only 7.3% of its revenue, worked out (source: Nvidia Q2 fiscal 2027 results). A company that sells far more can spend more on research while keeping a smaller share of its sales for it.

Why AMD's margin trails Nvidia's

Nvidia's gross margin was 75.0% in its quarter ended July 26, 2026, against AMD's 56% non-GAAP margin in the quarter ended June 27, 2026, a gap of about 19 points (source: Nvidia Q2 fiscal 2027 results). Three differences stand out in AMD's own filings and comments: what each company sells, Nvidia's software, and pricing.

The first is mix, meaning the blend of products in a company's sales. Data Center supplied about 92% of Nvidia's revenue that quarter, worked out (source: Nvidia Q2 fiscal 2027 results). At AMD the share was about 58%, also worked out (source: AMD Q2 2026 results). Inside AMD, the pieces earn different margins. Hu said on the August 4 call that AMD's gross margin "is primarily driven by the business mix". She added that its server chip business lifts the average, while its data center AI business carries a gross margin "slightly below corporate average" (source: AMD Q2 2026 earnings call). So the AI accelerators at the center of AMD's growth earn it less than its average sale.

The second is the software gap. AMD's annual report says Nvidia promotes its systems by drawing on three things: its market position in data center graphics processing units (GPUs), its financial resources and its "proprietary software ecosystem" (source: AMD Form 10-K, fiscal 2025). A software ecosystem is the set of tools and code libraries developers use to program a company's chips. The third is pricing pressure on AMD's own processors. The same report says Intel prices its chips aggressively, which has cut AMD's unit sales and its average selling prices, meaning the average revenue per chip sold (source: AMD Form 10-K, fiscal 2025).

The gap is one of the clearest differences between Nvidia and AMD stock. It also shows what AMD's margin needs from here: a larger share of high-margin products, and prices that hold as its AI chips ramp.

AMD's reported 10% price increase and pricing power

Pricing power is a company's ability to raise prices without losing customers, and the latest test of AMD's comes from a report. On September 18, 2026, TrendForce reported that AMD had told customers of price rises of about 10% from the fourth quarter on AI accelerators, consumer graphics chips and motherboard chipsets (source: TrendForce, September 18, 2026).

The report rests on ChannelGate, a supply-chain source. It links the move to a reported price rise of about 10% from Taiwan Semiconductor Manufacturing Company (TSMC), the foundry that makes much of AMD's silicon. It also notes that processors were not mentioned (source: TrendForce, September 18, 2026). AMD has issued no press release on its prices since then (source: AMD press releases). Wafer prices feed straight into AMD's cost of sales, one reason AMD's dependence on TSMC matters for its margin.

A simple example shows what a price rise does to the margin. Say a chip costs AMD $44 to make and sells for $100, a 56% gross margin. If the cost rises 10% to $48.40 and the price also rises 10% to $110, gross profit grows from $56 to $61.60. The margin stays at 56%, worked out. If AMD could pass on only half of it, a 5% rise to $105, gross profit would be $56.60 and the margin would slip to about 54%. Matching a cost increase protects the percentage, while beating it widens the margin.

Higher prices can also cost sales. On the August 4 call, Lisa Su, AMD's chief executive, said AMD's gaming graphics revenue fell partly because higher part costs across the industry raised graphics card prices and weighed on demand (source: AMD Q2 2026 earnings call). A price rise widens the margin only if buyers keep ordering.

The answer will come from AMD's own numbers. Its fourth-quarter margin, the first quarter the reported increases would cover, will show whether they happened and held. Before that, the November 3 report will carry AMD's gross-margin guide for the fourth quarter, the first figure that could show any price change.

Why AMD's margins matter to the stock

AMD's margins matter to the stock because earnings are revenue multiplied by margin, and a share price is a claim on future earnings. At the $13 billion of revenue AMD guided for the third quarter of 2026, each point of gross margin is worth about $130 million of gross profit, worked out (source: AMD Q2 2026 results).

You can carry that point all the way to earnings per share, the profit for each share outstanding. AMD guided a non-GAAP tax rate of 13% and about 1.66 billion diluted shares for the quarter (source: AMD Q2 2026 earnings call). After tax, $130 million becomes about $113 million, which is roughly 7 cents a share in a single quarter, worked out. Against AMD's second-quarter non-GAAP earnings of $1.66 a share, one point of margin moves the result by about 4%, worked out (source: AMD Q2 2026 results).

The bigger argument is about where AMD's margins are heading. At its Financial Analyst Day in November 2025, AMD set targets for the next three to five years. It aimed for revenue growth above 35% a year, a non-GAAP operating margin above 35% and non-GAAP earnings per share above $20 (source: AMD, November 11, 2025). AMD's adjusted operating margin was 27% in the second quarter of 2026 (source: AMD Q2 2026 results). Closing that gap of more than 8 points on a growing revenue base is the margin argument behind AMD's share price. What investors pay for that argument is the question of how AMD stock is valued.

That is why the margin line is read as closely as revenue on a report night. Each quarterly release prints the gross margin, the operating margin, the guide and the reconciliation together, and AMD's earnings reports show where each one sits.

On BloFin, AMD's share price is traded through the AMDUSDT Perpetual, a futures contract with no expiry date that tracks AMD and settles in USDT. It offers leverage of up to 20x (source: BloFin, AMDUSDT contract details).

Ahead of AMD's next figures, you can check where the contract trades and its current funding rate from the AMDUSDT Perpetual page.

AMD's next margin report and the AMDUSDT Perpetual

AMD reports its third-quarter 2026 results on Tuesday, November 3, after the US stock market closes, with a call at 5PM ET (source: AMD, October 6, 2026). The figure to compare is the non-GAAP gross margin against AMD's guide of about 56%, and the same release brings the fourth-quarter guide.

The timing matters on BloFin. US clocks change on November 1, so on November 3 BloFin's regular weekday hours for stock futures run from 2.30PM to 9PM UTC, and 9PM UTC is 4PM ET. Outside regular weekday trading hours, and on weekends and market holidays, BloFin may limit AMDUSDT to reduce-only orders (source: BloFin stock futures notice, April 21, 2026). A reduce-only order is allowed only to cut back or close a position you already hold, so it will not open a new one (source: BloFin Help Center, Reduce Only).

So AMD's margin news reaches the perpetual after BloFin's regular hours have ended for the day. A position you already hold meets the figures as soon as they are out, while opening a new one may have to wait for the AMD perpetual's regular hours the next day. Planning a position for that night before the close is part of trading AMD around earnings.

Leverage multiplies whatever the margin surprise does to the price. Say you hold a long at 10x and AMD falls 5% after the report: that is a loss of about half your margin, worked out, before fees. Go further and liquidation can reduce or close the position when the collateral backing it, after unrealized gains or losses, falls to the closing fee plus the maintenance margin, the minimum margin an open position must keep (source: BloFin Help Center, Forced Liquidation Rules). Lower leverage leaves more room, and you choose it when you trade AMD with leverage on BloFin.

Looking to trade the AMDUSDT Perpetual around AMD's next margin report? To get started, you'll need to first create a BloFin account, fund your account with cryptocurrency, and go to the AMDUSDT Perpetual trading page.

Frequently asked questions

Is AMD a profitable company?

AMD is profitable on both its standard and adjusted figures. Under GAAP it earned net income of $4.3 billion in fiscal 2025, up from $1.6 billion in 2024, and its adjusted net income reached a record $6.8 billion (source: AMD Q4 2025 results). In the second quarter of 2026 alone it earned $2.3 billion under GAAP on $11.5 billion of revenue (source: AMD Q2 2026 results). Its profits have grown faster than its sales, which is what a rising margin looks like.

What is AMD's net profit margin?

AMD's GAAP net profit margin was about 20% in the second quarter of 2026, worked out from $2.3 billion of net income on $11.5 billion of revenue. That quarter was lifted by $598 million of other income, which included $483 million of net gains on long-term investments that AMD's adjusted figures take out (source: AMD Q2 2026 results). On AMD's non-GAAP basis, net income was $2.8 billion, a margin of about 24%, worked out.

What was AMD's gross margin in 2025?

AMD's gross margin for fiscal 2025 was 50% under GAAP and 52% on its non-GAAP basis, against 49% and 53% in 2024 (source: AMD Q4 2025 results). The year carried about $440 million of net MI308 inventory charges, after about $360 million of the reserve was released in the fourth quarter (source: AMD Form 10-K, fiscal 2025). Revenue reached a record $34.6 billion (source: AMD Q4 2025 results). Measured on GAAP, AMD's gross margin has risen each year since 2023, when it was about 46%, worked out (source: AMD Form 10-K, fiscal 2025).

What is AMD's adjusted EBITDA margin?

AMD's adjusted EBITDA was $3.3 billion in the second quarter of 2026, about 29% of revenue, worked out, against about 14% a year earlier. EBITDA stands for earnings before interest, taxes, depreciation and amortization. AMD's adjusted version starts from net income and adds back interest, tax, depreciation, amortization, stock-based compensation and acquisition costs, while taking out other income such as investment gains (source: AMD Q2 2026 results). It sits about 2 points above the non-GAAP operating margin of 27% mainly because $221 million of depreciation is also added back.

How do memory prices affect AMD's margins?

Memory is one of AMD's costs, and its latest quarterly report warns that an industry-wide memory shortage has raised memory prices, which could raise production costs and hurt its gross margin (source: AMD Form 10-Q, Q2 2026). Asked about memory costs on the August 4 call, Lisa Su said memory capacity is one of the strengths of AMD's AI systems. She said AMD has "very good visibility" into its high-bandwidth memory supply for 2027, and that it can cut the memory in a system where customers gain less from it (source: AMD Q2 2026 earnings call).

Researched and written by the BloFin Academy editorial team with AI-assisted drafting. All facts independently verified. Primary sources include AMD's results releases for the second, third and fourth quarters of 2025 and the first and second quarters of 2026. They also include its Form 10-Q filings for the quarters ended September 27, 2025 and June 27, 2026, its Form 10-K for fiscal 2025 and the transcript of its second-quarter 2026 earnings call. AMD's Financial Analyst Day release of November 11, 2025, its release of October 6, 2026 on the third-quarter report date and its list of press releases complete the company's own records. Other sources are Nvidia's second-quarter fiscal 2027 results, TrendForce's report of September 18, 2026 and AMD price history from Yahoo Finance. BloFin's sources are its AMDUSDT contract details, its stock futures notice of April 21, 2026 and its help center articles on reduce-only orders and forced liquidation, current as of October 7, 2026.

Nothing in this article constitutes financial advice, and nothing in it is a recommendation to buy, sell or hold AMD in any form. AMD's margin guide is its own estimate and can be missed, and a one-off charge or release can move a single quarter's margin by several points. The 10% price increase is a supply-chain report AMD has not confirmed. AMD reports after the US market close. Outside regular weekday trading hours, and on weekends and market holidays, BloFin may accept only orders that reduce a position, and a leveraged AMDUSDT Perpetual position held through a report can be liquidated. Past performance does not indicate future results. Do your own research and consider your risk tolerance before you trade on BloFin.