Advanced Micro Devices (AMD), the primary competitor to NVIDIA in data center accelerators, saw shares fall more than 7% in after-hours trading Tuesday after the chipmaker reported record second-quarter revenue alongside a sharp increase in capital spending.

AMD spent $808 million on property and equipment during the quarter, up from $389 million in the first quarter and $282 million a year earlier. Capital expenditures totaled $1.2 billion for the first six months of 2026, compared with $494 million during the same period last year.

Free cash flow declined to $1.56 billion from $2.57 billion in the prior quarter, though it remained above the $1.18 billion reported a year earlier. Operating cash flow from continuing operations came in at $2.37 billion, down from $2.96 billion sequentially and up from $1.46 billion year over year.

The company posted record revenue of $11.54 billion, representing 50% growth from $7.69 billion a year earlier and a 13% increase from the first quarter.

Adjusted earnings reached $1.66 per share, compared with $0.48 in the year-ago quarter. Adjusted net income surged 253% to $2.76 billion, while adjusted operating income climbed to $3.09 billion from $897 million.

On a GAAP basis, AMD reported net income of $2.3 billion, or $1.38 per diluted share, versus $872 million, or $0.54 per share, in the same quarter last year.

Data center revenue more than doubled to $6.72 billion from $3.24 billion a year earlier, driven by demand for AMD EPYC processors and Instinct accelerators. The segment accounted for 58% of total quarterly revenue and produced $2.1 billion in operating income, underscoring AMD's deepening reliance on AI infrastructure demand as it works to close the gap with NVIDIA's commanding lead in the accelerator market.

Client and gaming revenue combined rose 6% to $3.84 billion. Client revenue increased 23% to $3.06 billion, while gaming revenue fell 31% to $779 million due to lower semi-custom revenue, which includes custom chips for game consoles. Embedded revenue grew 19% to $977 million, generating operating income of $386 million.

AMD closed the quarter with $13.11 billion in cash, cash equivalents, and short-term investments, up from $12.35 billion in the first quarter. Total debt held nearly flat at $3.23 billion.

For the third quarter, AMD projects revenue of approximately $13 billion, plus or minus $300 million. The midpoint reflects roughly 41% year-over-year growth and 13% sequential growth. The company expects its adjusted gross margin to hold at approximately 56%.

CEO Lisa Su said AMD anticipates data center sales will accelerate in the second half of the year as demand for EPYC processors intensifies and deployments of Instinct accelerators and the Helios rack-scale platform expand.

AMD reported that Helios systems are being deployed by Anthropic, Meta, Microsoft, OpenAI, Oracle, and other AI customers. The company also disclosed an agreement with Anthropic covering the deployment of up to two gigawatts of MI450 Series accelerators in Helios racks. The breadth of named customers highlights AMD's progress securing design wins across major AI labs and cloud providers, a critical measure of competitiveness against NVIDIA's established CUDA software ecosystem.

The after-hours share-price decline came despite the record revenue, triple-digit profit growth, and third-quarter guidance projecting continued double-digit gains.