Thank you, and welcome to AMD's 2025 Second Quarter Financial Results Conference Call. By now, you should have had the opportunity to review a copy of our earnings press release and the accompanying slides. If you have not had the chance to review these materials, they can be found on the Investor Relations page of amd.com. We will refer primarily to non-GAAP financial measures during today's call. The full non-GAAP to GAAP reconciliations are available in today's press release and slides posted on our website. Participants in today's conference call are Dr. Lisa Su, our Chair and Chief Executive Officer; and Jean Hu, our Executive Vice President, Chief Financial Officer and Treasurer. This is a live call and will be replayed via webcast on our website. Before we begin, I would like to note that Jean Hu will present at Citi's 2025 Global TMT Conference on Wednesday, September 3; and Forrest Norrod, Executive Vice President and General Manager of Data Center Solutions business unit, will present at the Goldman Sachs Communacopia and Technology Conference on Monday, September 8. Today's discussion contains forward-looking statements based on our current beliefs, assumptions, and expectations, speaks only as of today and as such, involve risks and uncertainties that could cause actual results to differ materially from our current expectations. Please refer to the cautionary statement in our press release for more information on factors that could cause actual results to differ materially. With that, I will hand the call over to Lisa.

Thank you, Matt, and good afternoon to all those listening today. We delivered very strong second quarter results, with revenue exceeding the midpoint of guidance as higher EPYC and Ryzen processor sales more than offset headwinds from export controls that impacted Instinct sales. We set records for both EPYC and Ryzen CPU sales, reflecting the broad-based demand for our differentiated high-performance data center, PC, and embedded processors. Second quarter revenue increased 32% year-over-year to a record $7.7 billion, and we delivered over $1 billion in free cash flow. Excluding the $800 million inventory write-down related to data center AI export controls, gross margin was 54%, marking our sixth consecutive quarter of year-over-year margin expansion led by a richer product mix. Turning to the segments. Data Center segment revenue increased 14% year-over-year to $3.2 billion. We saw robust demand across our EPYC portfolio to power cloud and enterprise workloads and increasingly for emerging AI use cases. In particular, adoption of agentic AI is creating additional demand for general purpose compute infrastructure as customers quickly realize that each token generated by a GPU triggers multiple CPU-intensive tasks. Against this backdrop, fifth-gen EPYC Turin shipments ramped significantly, and we had sustained demand for our prior-generation EPYC processors. As a result, we set records for both cloud and enterprise CPU sales and delivered our 33rd consecutive quarter of year-over-year share gains. In cloud, adoption expanded with the largest hyperscalers as they deployed EPYC to power more of their mission-critical infrastructure, services, and public cloud products. More than 100 new AMD-powered cloud instances launched in the quarter, including multiple Turin instances from Google and Oracle Cloud that deliver up to twice the performance of our previous generation, which were already the industry's highest-performing offerings. There are now nearly 1,200 EPYC cloud instances available globally as providers continue expanding both the breadth and regional availability of their AMD offerings. This continued expansion is accelerating enterprise adoption of EPYC in the cloud, with deployments growing significantly from the prior quarter as we closed large wins with dozens of large aerospace, streaming, financial services, retail, and energy companies. EPYC adoption also grew with telecom customers as providers modernize their infrastructure for next-generation networks. For example, KDDI announced plans to deploy EPYC processors to power its 5G virtualized network. And Nokia selected EPYC for its cloud platform used by service providers to build, deploy, and manage core network functions. Turning to enterprise on-prem adoption. HPE, Dell, Lenovo, and Super Micro launched 28 new Turin platforms in the quarter that deliver leadership performance, efficiency, and total cost of ownership across a wide range of enterprise workloads. EPYC enterprise deployments grew significantly from the prior quarter, supported by new wins with large technology, automotive, manufacturing, financial services, and public sector customers. To extend our momentum with SMB and hosted IT service customers, we launched the EPYC 4005 Series that combines enterprise-grade performance and features and cost-optimized platforms purpose-built for smaller scale deployments. Turning to HPC. AMD now powers more than one-third of the world's fastest supercomputers, including El Capitan and Frontier, which retained the number one and number two spots on the latest Top 500 list. We also power 12 of the top 20 systems on the Green500, highlighting the performance per watt advantages of EPYC and Instinct for large-scale deployments. Looking ahead, we remain bullish on our server CPU business, driven by durable tailwinds, including growing demand for cloud and on-prem compute, sustained share gains, and the growing investments in general purpose infrastructure required to enable AI. Turning to our Data Center AI business. Revenue declined year-over-year as U.S. export restrictions effectively eliminated MI308 sales to China, and we began transitioning to our next-generation MI350 series accelerators. We made solid progress with MI300 and MI325 in the quarter, closing new wins and expanding adoption with Tier 1 customers, next-generation AI cloud providers, and end users. Today, seven of the top ten model builders and AI companies use Instinct, underscoring the performance and total cost of ownership advantages of our Data Center AI solutions. We launched our Instinct MI350 series with industry-leading memory bandwidth and capacity and broad adoption across hyperscalers, AI companies, and OEMs. From a competitive standpoint, MI355 matches or exceeds B200 in critical training and inference workloads and delivers comparable performance to GB200 for key workloads at significantly lower cost and complexity. For upscale inferencing, MI355 delivers up to 40% more tokens per dollar, providing leadership performance and clear total cost of ownership advantages. With the MI350 series, we're also expanding our system-level capabilities to support deployments powered by AMD CPUs, GPUs, and NICs. As one example, Oracle is building a 27,000-plus node AI cluster combining MI355X accelerators, fifth-gen EPYC Turin CPUs, and Pollara 400 SmartNICs. We began volume production of the MI350 series ahead of schedule in June and expect a steep production ramp in the second half of the year to support large-scale production deployments with multiple customers. Our sovereign AI engagements accelerated in the quarter as governments around the world adopt AMD technology to build secure AI infrastructure and advance their economies. As one example, we announced a multibillion-dollar collaboration with HUMAIN to build AI infrastructure powered entirely on AMD CPUs, GPUs, and software. Initial deployments are underway in key regions with quarterly expansions planned over the coming years. In addition, we have more than 40 active engagements globally and see significant opportunities to power an increasingly larger portion of national computing centers and sovereign AI initiatives. On the AI software front, we made significant progress this quarter increasing the performance, improving the usability, and expanding the adoption of ROCm. We announced ROCm 7 with major upgrades across every layer of the stack, delivering more than three times higher inferencing and training performance compared to our prior generation and adding support for large-scale training, distributed inference, and lower precision data types. To deepen developer engagement, we introduced nightly ROCm builds and expanded access to Instinct compute infrastructure, including launching our first developer cloud that provides preconfigured containers for instant access to AMD GPUs. We also expanded native support for ROCm across key frameworks, including vLLM and SGLang, enabling Frontier models like Llama 4, Gemma 3, and DeepSeek-R1 to launch with day zero AMD support. To accelerate enterprise adoption, we introduced ROCm Enterprise AI, a full-stack platform that integrates seamlessly with existing IT infrastructure and includes everything needed for an enterprise to deploy, manage, and scale AI across their business. Looking ahead, the development of our next-generation MI400 series is progressing rapidly. These are the most advanced GPUs we have ever built with up to 40 petaflops of FP4 AI performance and 50% more memory, memory bandwidth, and scale-out throughput than the competition. With the MI400 series, we're bringing together everything we've learned across silicon, software, and systems to deliver Helios, a full-stack rack scale AI platform. Helios is purpose-built for the most demanding AI workloads, with each rack connecting up to 72 GPUs that can operate as a single massive AI accelerator. Helios is expected to deliver up to a 10x generational performance increase for the most advanced Frontier models, and we believe it will be the highest-performance AI system in the world when it launches. MI400 series development is progressing well towards our planned launch in 2026, with significant interest in large-scale deployments from multiple high-profile customers. To accelerate our development, we have invested significantly to expand our AI software and hardware capabilities, both organically and inorganically, with a number of acquisitions and strategic investments. We strengthened our software stack last quarter with the addition of the Brium and Lamini teams, building on our acquisitions of Nod.ai, Mipsology, and Silo AI. On the hardware side, we added a world-class rack and data center scale design team in the second quarter with our acquisition of ZT Systems. The ZT team is integrated seamlessly, and they are actively engaging with multiple customers to accelerate deployments of our Helios solutions at scale. We also announced last quarter that Sanmina intends to acquire ZT's U.S.-based manufacturing business, becoming our lead partner for AI rack manufacturing. Turning to the AI regulatory environment. Earlier this quarter, we were notified by the Department of Commerce that it is moving forward with the review of our license applications to export MI308 to China. We appreciate the focus the administration is placing on ensuring that U.S. technology remains central to global AI infrastructure, and we expect to resume MI308 shipments as licenses are approved, subject to end customer demand and supply chain readiness. As our licenses are still under review, we are not including any MI308 revenue in our third quarter guidance. Despite that, we expect Instinct revenue to grow year-over-year in the third quarter, driven by the ramp of MI350 at multiple customers. In Client and Gaming, segment revenue increased 69% year-over-year to $3.6 billion, driven by record client CPU sales and strong demand for our semi-custom game console SoCs and Radeon GPUs. Client revenue increased 67% year-over-year to $2.5 billion, led by record desktop CPU sales. Demand for our latest-generation Ryzen 9000 series was strong, especially for our differentiated X3D processors. We delivered record desktop channel CPU sales as Ryzen processors consistently topped the best-selling CPU lists at major global e-tailers throughout the quarter. We also expanded our Zen 5 desktop portfolio with the launch of our latest Threadripper processors that feature up to 96 cores and deliver up to double the performance of the competition in many popular content creation and design workloads. In mobile, demand for AMD-powered notebooks was strong with sellout growing by a large double-digit percentage year-over-year. We drove a richer mix of higher average selling price mobile parts year-over-year as we expanded our share in the premium notebook segment where our Ryzen AI 300 CPUs deliver leadership performance and value for both general-purpose and AI workloads. In commercial PCs, Ryzen adoption accelerated as OEM consumption increased more than 25% year-over-year. We saw strong sell-through for AMD commercial notebooks with Lenovo and HP and a significant uptick in Dell sales as they ramp availability of their AMD commercial portfolio. We also closed new enterprise wins with Forbes 2000 pharma, tech, automotive, financial services, aerospace, and healthcare companies. We expect to continue growing our commercial client share based on the strength of our product portfolio and expanded breadth of OEM offerings. Looking more broadly, we remain confident we can continue growing client processor revenue ahead of the market over the coming quarters, driven by increased adoption of our desktop and notebook products, growing commercial momentum, and a richer product mix. In Gaming, revenue increased 73% year-over-year to $1.1 billion. Semi-custom revenue increased by a large double-digit percentage year-over-year as console inventories normalized and our customers began preparing for the holiday season. We announced a new multiyear collaboration with Microsoft for custom chips that will power the next generation of Xbox devices, including consoles, PCs, and handhelds. We also deepened our collaboration with Sony through Project Amethyst, a co-engineering program that will use machine learning to power the next wave of immersive gaming experiences. In PC gaming, demand for our latest-generation Radeon 9000 series GPUs was very strong, with desktop GPU sell-through accelerating in the quarter as demand outpaced supply. We launched the Radeon 9600 XT, extending the performance advantages of RDNA 4 to mainstream gamers and delivering a significant uplift in gaming performance, including more than double the ray tracing of our prior generation. As part of our end-to-end AI strategy, we introduced the Radeon AI Pro R9700 GPU for local inferencing, model fine-tuning, and other data-intensive workloads. The R9700 features more memory, full ROCm support, and multi-GPU scalability, enabling advanced AI development and deployment directly on the desktop. Turning to our Embedded segment. Revenue decreased 4% year-over-year to $824 million. Demand continues recovering gradually with sell-through in the second quarter picking up as strength in most markets was offset by a few pockets of softness in inventory reduction actions largely with industrial customers. We expanded our Embedded portfolio with the first production shipments of Spartan UltraScale+ FPGAs that deliver leadership performance and advanced security for cost-sensitive low-power applications. Adoption of our Versal adaptive SoCs continues expanding in high-end applications including next-generation robotaxi platforms developed by Bosch in Europe, where Versal serves as a high-performance controller, enabling real-time processing, security, and encryption in fully electric automated vehicles. Looking ahead, we expect improving demand in the test and measurement, communications, and aerospace markets will drive a return to sequential growth in the second half of 2025. Longer term, design win momentum continues to build, tracking ahead of this point last year and putting us on pace to pass the record $14 billion in design wins we achieved in 2024. In summary, demand is very strong across our product portfolio, and we are well positioned to deliver significant growth in the second half of the year, led by the steep ramp of MI350 series accelerators and ongoing EPYC and Ryzen share gains. Our server and PC CPU businesses are accelerating, driven by growing demand for high-performance compute, sustained share gains, the strength of our product portfolio and expanded go-to-market investments. Our Embedded and Gaming businesses are returning to growth and are well positioned for long-term success, supported by strong design win momentum. And in AI, we are seeing strong adoption of our MI350 series and ROCm 7 as we deliver leadership performance and total cost of ownership advantages across a broader range of workloads and ramp deployments with an expanded set of cloud and enterprise customers. Looking ahead, we see a clear path to scaling our AI business to tens of billions of dollars in annual revenue. We are very excited about our next-generation MI400 series, which is another giant step forward on our road map and has been designed to deliver leadership performance at the chip, server, and rack levels. Customer interest for the MI400 series is very strong, and we are actively engaging with an expanding set of customers to support large-scale deployments in 2026. We are in the early stages of an industry-wide AI transformation that will drive a step function increase in compute demand across all of our markets, positioning us for significant revenue and earnings growth over the coming years. Now I'd like to turn the call over to Jean to provide some additional color on our second quarter results.

Thank you, Lisa, and good afternoon, everyone. I'll start with a review of our financial results and then provide our outlook for the third quarter of fiscal 2025. We are pleased with our strong second quarter financial results. We delivered record revenue of $7.7 billion, exceeding the midpoint of our guidance, up 32% year-over-year, reflecting strong momentum across our business. Record sales of Ryzen and EPYC processors and higher semi-custom shipments more than offset the impact of the U.S. export controls restricting MI308 sales to China. Revenue increased 3% sequentially due to strong growth in the Client and the Gaming segment, partially offset by the Data Center revenue decrease due to export controls. Gross margin was 43%, down 10 points from 53% a year ago. The decrease was due to the $800 million inventory and related charges associated with the export restrictions. Excluding this charge, non-GAAP gross margin would have been approximately 54%. Operating expenses were approximately $2.4 billion, an increase of 32% year-over-year as we continue to invest aggressively in go-to-market activities for revenue growth and in R&D to capitalize on significant future AI expansion opportunities. Operating income was $897 million, representing a 12% operating margin compared to $1.3 billion or 22% a year ago. The decline was primarily due to the inventory and related charges. Taxes, interest expense and other totaled $126 million. For the second quarter of 2025, diluted earnings per share were $0.48 compared to $0.69 a year ago. The inventory and related charges reduced earnings per share by approximately $0.43. Now turning to our reportable segment, starting with Data Center. Data Center segment revenue was $3.2 billion, up 14% year-over-year, driven by strong EPYC CPU revenue and share gains across both cloud and enterprise customers. On a sequential basis, Data Center revenue decreased 12% due to the impact of the export controls on MI308. The Data Center segment operating loss was $155 million compared to operating income of $743 million a year ago or 26% of revenue. The loss was primarily due to the inventory and related charges. Client and Gaming segment revenue was $3.6 billion, up 69% year-over-year and 20% sequentially, driven by record client CPU sales and strong demand for our PC and console gaming products. In the Client business, revenue was a record of $2.5 billion, up 67% year-over-year, driven by record sales of our Ryzen desktop CPUs and a richer product mix. Gaming revenue rose to $1.1 billion, up 73% year-over-year, reflecting strong demand for our newly launched gaming GPUs and higher semi-custom revenue as inventory has now normalized and the customers prepare for the holiday season. Client and Gaming segment operating income was $767 million or 21% of revenue compared to $166 million or 8% a year ago, driven by richer Client product mix and operating leverage on higher revenue. Embedded segment revenue was $824 million, down 4% year-over-year and flat sequentially as Embedded end market demand remains mixed. Embedded segment operating income was $275 million or 33% of revenue compared to $345 million or 40% a year ago. The decline in operating income was primarily due to product mix. Before I review the balance sheet and cash flow, as a reminder, we closed the acquisition of ZT Systems early in the second quarter. As we had announced our intent to divest the ZT manufacturing business, the financial results of the ZT manufacturing business are reported separately in our financial statement as discontinued operations and are excluded from our non-GAAP financials. Subsequently, in May, we entered into agreement with Sanmina Corporation to sell the ZT manufacturing business for $3 billion in cash and stock, inclusive of contingent payment. The transaction is expected to close near the end of 2025, subject to regulatory approvals and the customary closing conditions. Turning to the balance sheet and cash flow. During the quarter, we generated $1.5 billion in cash from operating activities of continuing operations, and free cash flow was a record of $1.2 billion. We returned $478 million to shareholders through share repurchase, resulting in $1.2 billion in share repurchases for the first half of 2025. In May, our Board of Directors approved an additional $6 billion authorization. Exiting the quarter, we have $9.5 billion remaining under our share repurchase program. At the end of the quarter, cash, cash equivalents and short-term investment were $5.9 billion. Our long-term debt was $3.2 billion during the quarter. We paid down $950 million of commercial paper used to finance the ZT Systems acquisition close. Now turning to our third quarter 2025 outlook. Please note that our third quarter outlook does not include any revenue from AMD Instinct MI308 shipment to China as our license applications are currently under review by U.S. government. For the third quarter of 2025, we expect revenue to be approximately $8.7 billion, plus or minus $300 million. The midpoint of our guidance represents approximately 28% year-over-year revenue growth, driven by strong double-digit growth in our Client and Gaming, and Data Center segments. Sequentially, we expect revenue to grow by approximately 13%, driven by strong double-digit growth in the Data Center segment with the ramp of our AMD Instinct MI350 series GPU products; modest growth in our Client and Gaming segment, with Client revenue increasing and the Gaming revenue to be flattish, and our Embedded segment revenue to return to growth. In addition, we expect third quarter non-GAAP gross margin to be approximately 54%, and we expect non-GAAP operating expenses to be approximately $2.55 billion. We expect net interest and other expenses to be a gain of approximately $10 million. We expect our non-GAAP effective tax rate to be 13%, and diluted share count is expected to be approximately 1.63 billion shares. In closing, we executed very well in the first half of the year, delivering record revenue and building strong momentum for growth in the second half. The strategic investments we are making position us to capitalize on the expanding AI opportunities across all our end markets, driving sustainable long-term revenue growth and earnings expansion for compelling value creation. With that, I'll turn it back to Matt for the Q&A session.

Operator, will you please poll the audience for questions? Thank you.

Lisa, I want to start on the Client business. So you had previously laid out a second half outlook that was roughly flattish with the first half as you're kind of protecting against some pull forwards. So first, do you think that your Q2 results included some pull forwards, and the second half should still be flattish? And longer-term after the Intel commentary regarding 18A, maybe what that means as a knee-jerk reaction just right away for AMD longer term in terms of share and average selling prices?

Sure, Tom. Thanks for the question. First, our Client and Gaming segment, especially our Client business, performed very well in the first half of the year, growing 68% year-over-year. When we break that down, we see strong performance across all parts of our Client business, particularly in the desktop channel where we lead with our top gaming GPUs, the X3D GPUs. We also experienced significant adoption of Ryzen AI during the first half, reflected in our sell-through numbers. Additionally, our enterprise sales have been strong as we advanced those products. Regarding your question about pull forward, we believe there's not much of it; when we examine the sell-through trends, end-user demand for Client remains robust heading into the second half of the year. Our Q3 guidance indicates that the primary growth driver will come from the Data Center, particularly the ramping of MI350. We do expect some growth in our Client business, but it may be slightly below seasonal trends due to existing uncertainties. Nonetheless, the Client business is performing extremely well, and we believe we're gaining market share in key areas. The revenue increase in the first quarter and projections for the second quarter are largely due to higher average selling prices, which reflect our strong product portfolio. We recognize that we're still underrepresented in the enterprise segment, which is why we've strengthened our go-to-market efforts and resources, especially in collaboration with HP and Lenovo for enterprise PCs. We're also beginning to ramp with Dell, which we started in the second quarter and will continue into the second half of the year. These factors are all positive drivers for our Client business not only for the second half of 2025 but for the upcoming quarters as we explore our portfolio and future opportunities.

Super helpful. And then secondly, I was hopeful you could provide us a little more color on China. So the guide doesn't include MI308, but perhaps you could comment on when you get approval, if the supply chain is ready, what's currently in inventory? And maybe compare what you think the contribution will look like versus the $700 million in Q2 and the $800 million for the second half you spoke about in April.

Sure, Tom. So yes, let me answer some of the questions on China. I'm sure that there are some questions. Look, we're very pleased with the progress that's been made with the administration over the last couple of months. We've been working very closely with the administration. I think the focus here on ensuring that U.S. technology gets utilized throughout the world is something that we certainly support and very much want to contribute to. China is an important market for us. Given the timing of licenses, we have a number of licenses that are under review now. We are working with the Department of Commerce to get those reviewed. We do expect that once those licenses are approved, we will start MI308 shipments. In terms of the supply chain, most of our inventory was not in finished goods, so it was work in process, and it will take us a couple of quarters to run through that. The exact timing of revenue and contribution will depend a bit on when those licenses are actually granted. But overall, I think this is a better position than we were 90 days ago. And we certainly view China as a market that we would like to service with MI308, and we're working closely with the administration to do that.

Lisa, if we look into 2026, right, that's when I think the sovereign opportunity could get quite meaningful for AMD. What is the right way to size that? What does this joint venture structure mean with some of the contracts that you signed? And would you consider this incremental to the kind of growth rate that you're seeing with your current MI business or would this be instead of? So just if you could give us a way to size what is that incremental opportunity from sovereign customers when it comes to '26. Like is it dependent on MI400, right, in which case it might be more back half weighted, et cetera? So just some ways to think about sovereign for AMD next year.

Yes, we are very excited about the AI opportunities presented by MI355 and the MI400 series as we move into the latter half of this year and into 2026. There is a significant potential with hyperscalers, leading AI companies, and sovereign entities. Sovereign computing is definitely an important addition to the mix. While there are regulatory hurdles to be addressed on the sovereign side, we are collaborating closely with the administration on the necessary regulatory decisions. It is clear that there is a strong desire among countries for their own sovereign computing capabilities globally. The HUMAIN initiative we announced with Saudi Arabia exemplifies this, as our technology aligns well with their ambitions. Our offering's open ecosystem particularly appeals to the sovereign community. Overall, we see this as a complementary opportunity that will remain vital for us moving forward with both MI355 and the MI400 series.

Got it. And for my follow-up, I wanted to ask about gross margins for your MI product. So I understand in the early days, right, it has been dilutive. What kind of sales level is required for it to start becoming additive to margins? And let's say if I fast forward to Q4 and assume that your Q4 sales are growing year-on-year roughly the same rate as Q3 sales, should we expect gross margins to kind of stay at these Q3 levels? Or are there other plus/minus drivers we should think about in terms of gross margins as you go into Q4?

Thank you for your question, Vivek. The gross margin for our MI product is slightly below the corporate average at this time. Our main focus is on seizing larger, rapidly growing revenue opportunities and offering customers a better total cost of ownership to strengthen our market position. When considering our gross margin, it's important to note the various dynamics involved, such as different customers and product generations. Our operations team is consistently working to enhance operational efficiency, which is beneficial for improving the gross margin of our MI family over time. While this isn’t directly tied to quarterly revenue levels, it should be viewed as a positive long-term trend. Overall, gross margin dollars represent one of the fastest-growing market opportunities, and we aim to maximize this metric. I hope this clarifies your question.

Lisa, my question is about Data Center GPU. You mentioned that June has shown a year-over-year increase, suggesting it's possibly over $1 billion. You characterized it as a strong ramp into the second half of the year. Could you provide some insight into what that entails? Do you anticipate reaching around $7 billion for the year? Additionally, could you share any expectations for Q3? That would be helpful.

Yes, thanks, Tim, for the question. I think what we said in the prepared remarks is that we are seeing a strong ramp from Q2 into Q3. MI355, we actually started production in June. So we had some shipments sort of in the month of June, but it really is ramping as we go through this quarter and the third quarter. So in terms of guideposts, we said it would grow year-on-year from last year. And that, I think, is a strong ramp, and then we would expect it to grow into the fourth quarter as well. The demand, I should say, what we're seeing from customers is I think really positive around MI355. Sort of the way I would contrast it with maybe the MI300 ramp, I think MI300 started with perhaps some smaller deployments. I think what we're seeing with MI355 is very competitive versus the B200, GB200 family of products. I think there's a strong desire to really use us at scale. The MI355 is very strong for inferencing. We're also working with a number of customers on training. And this is also an opportunity for us to build into the MI400 series as we go into 2026. So we're bullish on MI355 and where the AI opportunity is for us. And I think we're right on track to what we expected to be as we were going through the development of the roadmap.

And then, Lisa, just on that point also, you did talk about a new developer cloud. So obviously, you're beginning to lease back some of the capacity that you're selling into the clouds and the neoclouds. Is that going to be a material portion of the revenue you're going to recognize for MI355 in the back half of the year? Can you just talk about that and maybe how to think about how much demand that's going to stimulate and what the ultimate goal is for that cloud?

Yes, there are a few aspects to your question, so let me address them. The developer cloud aims to simplify access for developers using AMD Instinct GPUs. Previously, our focus with the MI300 family was primarily on the largest hyperscalers and major customers, but we've noticed significant interest from a broader range of customers seeking easier access. By offering a developer cloud with ready-to-deploy containers, we enable easy training and inference without requiring long-term commitments. While I don't anticipate it significantly contributing to revenue in the second half of the year, it will certainly help customers gain experience with AMD. The more substantial revenue potential lies in the adoption by larger customers as they scale up their deployments, and we are actively working to expedite those deployments. Additionally, because the MI355 shares a similar infrastructure with the MI300, we believe it will ramp up quickly and effectively for customers, which is another appealing aspect of it.

Lisa, I want to revisit the Instinct side and the ramp-up of the MI355. It seems that the second half is going to see significant growth. You mentioned it would be higher year-over-year in the third quarter, which I believe you said about the same time last quarter. Since the MI308 is excluded from both figures, it shouldn't affect this, and I assume it represents an upside. I would like to know how things have changed since last quarter regarding the adoption of the MI350 family, especially since you launched it a bit early. Is the growth better than you anticipated a quarter ago, about the same, or not as good? Any insights on this would be appreciated.

Yes, thanks for the question. I think the main point is that the adoption is progressing faster than we expected. When launching a product, we ensure thorough validation with our customers. There’s significant interest in MI355, and over the past 90 days, we've seen considerable new customer interest, which is definitely a positive sign. Additionally, there's a lot of excitement around MI400 and the potential of the Helios rack. Many customers, encouraged by our strong roadmap, are eager to collaborate with us earlier in the product life cycle, which is again a positive development. Yes. Let me try, and then Jean might add if you want a little bit more detail. We do expect some growth in clients as we enter the third quarter, likely in the single-digit range. We continue to see good traction for our products in that portfolio. On the Gaming side, I would describe it as flat compared to Q2. Given our strong Q2, a flat performance is actually expected. Going into the fourth quarter, we anticipate a significant decline in the console business, likely in the double-digit range. Our customers typically prepare for the holiday season beforehand, which will wrap up by the fourth quarter. Therefore, we expect that the Client and Gaming segment will probably decline in the fourth quarter. Hopefully, that helps. Jean, did you want to add anything?

No, I think you covered it.

I wanted to ask about lead times on the Instinct family, specifically for the MI350 and MI400. As you increase cluster sizes, particularly with Oracle on the MI350 and plan to do the same with the MI400, how much lead time do you require from your customers? I would assume the lead time for your components is in months, while for larger-scale infrastructure deployments, it might take years. Could you provide insight into the visibility for the MI400?

Yes, our lead times are long due to the various processing steps involved, typically around 8 to 9 months. We have a robust supply chain and are actively preparing for the ramps of both the MI350 and MI400 series. Our engagement with customers is strong, particularly regarding the MI350 series deployments, which we are working to expedite. The MI350 series is compatible with existing data centers, which facilitates our efforts with customers. For the MI400 series, there are many details related to full rack scale design implementation. We are currently collaborating with our largest customers to ensure that our Helios rack aligns with their data center plans as we approach 2026. This visibility and the co-development and co-engineering efforts are crucial as we progress in the rack scale architecture. The ZT team we brought on board has been extremely beneficial in both building our internal platforms and addressing our customers' data center requirements.

I wanted to follow up on Vivek's question regarding gross margins. If we exclude the charges in the second quarter, your guidance suggests that gross margins will remain roughly flat sequentially, despite a significant increase in data center GPUs. It also appears that console sales are not declining in the third quarter. Can you explain the factors that are allowing you to maintain flat gross margins even with the increased presence of margin-dilutive data center GPUs in the mix?

Yes, Josh, thanks for the question. Yes, we are guiding our Q3 gross margin around 54%. And Q2, you're right, excluding the $800 million charge, it was close to 54%. I think the Gaming business actually is quite high, so the mix actually is unfavorable. But we do have some tailwinds we have been really driving. First, we have been expanding our server business, which has really nice gross margin. And on the Client business side, we are expanding the commercial PC business, so that really helps us to drive the gross margin up. In addition, we do have a really strong operational team. They are driving the gross margin improvement just from an operational efficiency perspective across the board. So overall, our objective is to continue to improve gross margin. Despite MI350's very strong ramp in Q3, we are able to continue to drive the margin up.

You mentioned a significant opportunity with MI400 previously. Can you discuss the expected time frame for that potential and what might enable you to achieve it sooner? Should we consider 2027 as a realistic target for reaching over $20 billion? I'd appreciate more detail on your comment about the tens of billions opportunity.

Yes, I mean, maybe without being specific, Joe, I can give you sort of the way I look at it and back to this notion of are we incrementally more confident. I think we're seeing a lot of positive signs in our AI customer adoption, I think the strength of the MI350 series, the very positive feedback that we're getting on MI400 from customers, the work that we're doing in terms of ensuring that we are fully ready for large-scale deployments of not just inference but training. I think when we get to tens of billions of dollars, we're talking about significant gigawatt-scale type deployments. And those would be important for us to get there. And we're certainly, I think, engaged with all of the right customers that can enable that type of ramp. But I won't necessarily speculate on the exact time other than to say, certainly, that would be our set of aspirations.

That's helpful. As these workloads evolve, you've mentioned inference and training along with various opportunities for AMD. Are you starting to see these areas converge? It seems that with inference, the reasoning models are becoming significantly more complex. Is rack scale becoming more crucial to the inference market than you initially expected? Could you provide some insights on how this complexity in inference is affecting your operations?

Yes, I completely agree, Joe. With the increase in models, we see that GPUs remain the preferred computing option for all the models available. As we move towards distributed inference and new techniques, the significance of both scale-up and scale-out architectures is becoming evident, and we are making investments in this area. Overall, we have a competitive roadmap for the upcoming generations that has received strong validation from customers. We are gathering valuable feedback regarding where they want us to enhance our resources and focus, which is very beneficial. Our main goal is to be a comprehensive solution provider for large customer deployments, and that's what we're striving for.

I do have a follow-up as well. I guess the first question is when we look at the Data Center guide, Jean, you had alluded to double-digit sequential growth. Obviously, the MI355 series kind of ramping. I'm curious, how can we conceptualize what you're expecting in the server side? And where do you think your market share is today in traditional enterprise servers outside of cloud?

Yes. Our Data Center business is experiencing strong double-digit growth in both server and MI segments, with both areas showing sequential growth. The ramp in MI is particularly notable. Regarding our server market share, we believe we are increasing our market share compared to Q1. Although a third party has not published a report yet, we are optimistic about the rise in market share in Q2 compared to Q1.

Aaron, I want to emphasize that the recent positive cloud CapEx numbers include not only GPUs but also substantial investments in CPUs. We're seeing stronger forecasts for server CPUs as the demand for AI content necessitates the use of traditional CPUs. We're very optimistic about the server market. The team has done an exceptional job, and if you look at our current portfolio, Turin and Genoa have gained strong adoption across diverse workloads, with growing enterprise adoption. All these factors are favorable for the server business in the latter half of 2025 and into 2026 and beyond.

Yes. And then as a follow-up, I'm kind of thinking about the China, the MI308 opportunity. When we do see a license, I think you alluded to this earlier, it's going to take a little bit of time to kind of ramp and get the supply chain to satisfy the demand. But I'm curious, the $800 million write-down that you had taken, is there no kind of finished inventory there? Does that come back? Do you have any reversal aspects of that once the license gets approved?

Let me start first. Then Lisa can add. First, on the $800 million, the majority of them are work in process. We really don't have that on the shelf, a finished good we can ship immediately. So we do need to take time if we get the license.

I guess, Lisa, was hoping you could level set us on the Instinct ramp into 2026. How are you thinking about the timing of the handoff, 350 to 400? How are you thinking about Helios' contributions? And I guess very importantly from a customer contribution perspective, how you might see that evolve from traditional hyperscalers to perhaps more sovereign and neocloud with the mix?

Certainly, C.J. As we move into the second half of this year, our focus will be on ramping up MI355 in preparation for the first half of next year. The development of the MI400 series is progressing well, as is the Helios platform, which we anticipate will generate significant revenue starting in 2026. Regarding contributions from various segments, such as hyperscalers, neoclouds, and sovereign markets, it's still early to discuss specifics. However, we expect hyperscalers and neoclouds, especially those collaborating with large AI companies, to be key components of the initial ramp-up. The sovereign market may follow later due to the timing of different build-out phases. I hope that provides some clarity, C.J.

Yes, thanks for the question. Our business model actually generated a lot of free cash flow. As you see in Q2, free cash flow generation was $1.2 billion. So if we close the ZT sale and we'll get more cash, overall, our capital allocation principle continues to be the first phase, investing, especially with the tremendous AI opportunities ahead of us. And then we will continue to return cash to shareholders. We did a $1.2 billion repurchase in the first half of the year. We are committed to continue to return cash to shareholders through share repurchase.

I wanted to clarify a little bit on the $1 billion increase in sequential sales. It would seem like it's coming from GPUs primarily. I was wondering if you could back that. And that's with nothing in China, and if the answer to the prior question that GPUs are over $1 billion, that kind of puts you at a $2 billion run rate. And I was just wondering if that was accurate in terms of thinking. And then I have just a very quick follow-up.

Ben, thanks for the question. If you look at the sequential revenue increase, as I mentioned during the prepared remarks, we see Data Center a strong double-digit increase, which includes both GPU and CPU, but GPU definitely drives the largest incremental amount increase. We also mentioned the Client actually is going to increase sequentially. In addition, the Embedded business will return to sequential growth. So multiple business contributed to sequential increase, but the majority of the increase is really driven by MI355's strong ramp.

Yes, Ben, it will take some time to ramp up, especially since we are already in early August. I don't expect to see much of it in the third quarter. However, as licenses are approved, we will schedule accordingly, and it will take some time to see the ramp up.

All right, operator, thank you very much. We appreciate everybody that joined the call today, and we'd just like to end the call now. Thank you.

Ladies and gentlemen, that does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.