AMD(US:AMD) Huachuang Securities·2026-02-06 09:00Investment Rating - The report assigns a strong buy rating for AMD, expecting it to outperform the benchmark index by more than 20% in the next six months [46]. Core Insights - AMD achieved record performance in FY25Q4 with total revenue reaching $10.3 billion, a year-over-year increase of 34% and a quarter-over-quarter increase of 11%. The gross margin significantly improved to 57%, up 290 basis points year-over-year, and diluted earnings per share were $1.53, reflecting a 40% increase year-over-year [2][7]. - The data center business generated $5.4 billion in revenue, marking a 39% year-over-year increase and a 24% quarter-over-quarter increase, driven by the penetration of the fifth-generation EPYC processors and the explosive growth of the Instinct GPU business [3][8]. - The client and gaming segment combined revenue was $3.9 billion, up 37% year-over-year but down 3% quarter-over-quarter, with the client business reaching a record high of $3.1 billion [3][9]. - The embedded business reported revenue of $950 million, a 3% year-over-year increase and an 11% quarter-over-quarter increase, with a total of $17 billion in design wins for 2025 [3][10]. - AMD provided guidance for FY26Q1, projecting revenue of approximately $9.8 billion (with a fluctuation of $300 million), a gross margin of about 55%, and operating expenses of around $3.05 billion [4][11]. Revenue Breakdown - Data Center Business: Revenue reached $5.4 billion, a 39% year-over-year increase and a 24% quarter-over-quarter increase, with significant contributions from the fifth-generation EPYC processors and the Instinct GPU business [3][8]. - Client and Gaming Business: Combined revenue was $3.9 billion, with the client segment at $3.1 billion (up 34% year-over-year) and gaming revenue at $843 million (up 50% year-over-year) [3][9]. - Embedded Business: Revenue was $950 million, with a 3% year-over-year increase and an 11% quarter-over-quarter increase, supported by strong demand in various markets [3][10]. Business Developments - AMD's new generation data center product MI355 has successfully entered mass production, contributing to the improvement in gross margin. The next-generation MI400 series and Helios platform are in development, with MI450 expected to launch in H2 2026 [4]. - The ROCm ecosystem continues to expand, supporting AMD GPUs and integrating into various applications, including healthcare [4].