A：Participants on today's conference call are Dr. Lisa Su, our chairman and CEO, and Jean, who is the executive vice president, CFO, and treasurer.

A：The Data Center segment increased revenue 57% year over year to a record $5.8 billion, driven by strong demand for their FPU CPUs and Instinct GPUs in servers.

A：The anticipated growth of the server CPU market is now expected to be greater than 20% annually, reaching over $1 billion by 2026, based on the demand signals being seen and the increase in CPU compute requirements driven by generative AI.

A：The advancements include the expanded strategic partnership with Meta, a new agreement with OpenAI, and the co-engineering of custom GPU accelerators. These developments are part of the company's efforts to support large-scale AI infrastructure deployments.

A：The expectations for the Radeon Technologies Group (RTG) include strong growth with their latest products and technologies, a significant ramp of next-generation Epic processors, and a forecast of tens of billions of dollars in annual data center AI revenue by 2027.

A：The client segment revenue increased 23% year over year to $3.6 billion, with the strongest growth seen in mobile processors and continued share gains across consumer and commercial markets.

A：The anticipated path for surpassing long-term financial targets includes generating more than $20 in EPS over the strategic timeframe, which is supported by the company's clear momentum across the business and the expanding market opportunity.

A：The strong first quarter revenue and earnings growth were driven by strong execution and operating leverage. Specifically, the revenue growth was driven by strong data center, client and gaming segment growth, and the return to growth in the embedded segment. Gross margin expanded, operating expenses grew at a lower rate compared to revenue growth, and operating income saw faster growth than top-line revenue.

A：The outlook for second quarter 2025 revenue is approximately $11.2 billion, up 46% year over year, driven by growth across all segments. The company expects non-GAAP gross margin to be approximately 56%, non-GAAP operating expenses to be approximately $3.3 billion, non-GAAP other income and expense to be approximately $60 million, a non-GAAP effective tax rate of 13%, and diluted share count to be approximately 1.66 billion shares.

A：In the data center segment, revenue grew 57% year over year to $5.8 billion, driven by strong demand for EPYC processors and the continued ramp of Instinct GPUs. The client segment had revenue of $3.6 billion, up 23% year over year, with the gaming segment revenue of $720 million, up 11% year over year.

A：The company focuses on general-purpose compute, head nodes that support AI accelerators, and CPUs for all of AI work. The goal is to build a broad portfolio of CPUs that are throughput optimized, power optimized, cost optimized, and AI infrastructure optimized, as seen in the Venice family.

A：The company feels extremely well-positioned with the Venice architecture and is working on Beyond Venice, looking forward to growing its share of the market and expecting significant traction and share gain in its targeted portfolio.

A：Products like Mi 450 and Helios are showing significant customer interest, with strong co-engineering efforts underway with OpenAI and Meta. The market forecasts are coming in above initial plans for 2027.

A：The company expects a broad range of customers to deploy the Mi 450 series at significant scales for both training and inference workloads, with the largest deployments being for inference. This interest allows the company to see a path to exceed original targets of greater than 80% CAGR.

A：The company acknowledges the tightness in the supply chain and data center build-outs but is confident in its ability to supply the growth levels discussed and to exceed them. They are working closely with customers and partners to ensure data center power visibility and expect more power capacity to come online in 2027.

A：The company is very pleased with the progress in the CPU ramps despite the complexity and is managing the situation well.

A：The company believes there is a need for a broad portfolio of CPUs as not all CPUs are the same. Different CPUs are needed for general purpose operations, head nodes, and AI tasks, and these will be optimized differently. They are focusing on optimizing their CPUs across various workloads.

A：The company is very pleased with the trend of its gross margins, which came in strong in Q1. They expect several tailwinds to positively impact gross margins, including growth in server CPUs, client business, and embedded business. Despite the Mi 450 ramping in Q3 and Q4, which is below the corporate average and will cause some dilution, the positive trends are expected to offset this and set up the gross margin well for 2027 and beyond. Long-term gross margins are expected to be in the range of 50.25% to 50.58%.

A：The projected growth for server CPU units is up to 25% to 30% in June, and for the year, it is suggested to be around 70% or more. This growth is attributed to unit shipment increases across various CPU families including Zen and Ryzen. While there are some price increases due to supply chain tightness and inflationary pressures, the focus is on shipping more units, with Asps (Average Sales Price) rising to some extent to cover these costs.

A：The increase in server CPU ASP is attributed to a shift in the mix of each new generation of CPUs, where the call counts are increasing. This rise in call counts drives the ASP up.

A：The adoption of new architectures such as multi-tenancy and low latency is expected to lead to different compute architectures being used for cost optimization. Although data center GPUs are still the primary accelerators, there may be optimizations around inference, low latency, and specific parts of the stack. This presents a natural evolution in the market with different variants that the company is well-prepared to address.

A：CPU growth is considered largely additive to the Total Addressable Market (TAM), meaning it's not at the expense of GPUs but rather complementary. To run foundational models, all accelerators are needed, and as AI tasks spawn more CPU tasks, the ratio of CPUs to GPUs within the overall compute increases. The key is to ensure the right ratio of CPUs to GPUs in deployments.

A：Memory price increases are seen as a cost inflation for AMD and its customers, representing an opportunity for price increases. The dynamic is challenging due to a tight memory environment and CapEx increases for customers. AMD has secured enough supply with memory vendors, and they are working closely with these partners and customers to ensure that every shipped CPU or GPU is paired with the appropriate memory to prevent compute from not being deployed.

A：AI is driving a significant portion of the growth in the CPU market, with a segmentation that includes traditional CPUs and AI-specific CPUs. The TAM for AI CPUs is expected to grow significantly, with increases in core counts likely to lead to higher ASPs. The largest portion of the growth is attributed to agentic AI CPU workloads.

A：The competitive landscape in server CPUs is dynamic with the introduction of ARM. However, the general consensus is that CPUs are critical for AI infrastructure, and the industry is focused on ensuring supply assurance. AMD feels well-positioned in the market with a broad portfolio of CPUs, and while ARM has good architecture, it is viewed as more of a point product compared to AMD's full portfolio.

A：The AI optimized CPU introduced by the company is named Verano. It is part of the company's ongoing innovations in architecture and advanced packaging, designed to cater to various workloads.

A：The company believes that the client business has performed well and that the mix shift within the client business is positive, particularly in the MNC or notebook business and with the commercial PC arena. However, they acknowledge that desktops, which are more consumer-focused, may be impacted by memory pricing and component price increases. For the second half of the year, the company plans for some demand impact due to memory pricing but remain focused on making progress in the commercial business and continuing to focus on the premium segments of the market, expecting to grow year over year.

A：The company acknowledges the tremendous demand for compute and strategic relationships with customers which contribute to potentially improving gross margins over time. They aim to scale their business while focusing on revenue growth, which is expected to drive gross margin improvements.

A：In Q1, the revenue from the data center AI was primarily due to lower China revenue. Excluding China revenue, the company did not specify the exact growth of the AI business in Q1; however, they mentioned that both data center AI and servers are expected to grow double-digit in Q2.

A：The difficulty in forecasting Opex is tied to the aggressive investment in AI, which is driving revenue momentum. Opex growth includes an increase tied to revenue outperforming expectations and investments in customer engagement for their data center AI business. Some Opex increase is also related to aligning resources with the company's strategic initiatives and market opportunities.

A：The company does not expect older products to stay around longer; they believe that customers prefer newer products due to their efficiency in performance, cost structure, and power consumption. They emphasize that newer products are in high demand and ensure that they ship what customers need, a trend expected to continue as they transition into new products like Venice.

A：The company recognizes the tightness of the supply chain but believes they excel in this area due to deep relationships across the supply chain. They have seen meaningful improvements and are able to secure more supply as demand from customers increases. This situation is beneficial as it involves not only CPUs but also 28nm demand, enabling better planning moving forward.

A：The company expects R&D growth to be much faster than SG&A expense growth. In the past few quarters, there has been significant investment in the go-to-market machine and sales marketing, which is expected to continue, resulting in faster year-over-year growth in R&D compared to SG&A.