AMD Posts Record $13.4 Billion Quarter as Data Center Sales Nearly Double
AMD's third-quarter revenue rose 45% to $13.4 billion as AI chip demand lifted data center sales, and it forecast about $17 billion for the fourth quarter.
Advanced Micro Devices reported record third-quarter revenue of $13.4 billion on Tuesday, up 45% from a year earlier, as sales of its data center chips nearly doubled on demand for artificial intelligence computing. The chipmaker also forecast fourth-quarter revenue of about $17 billion, well above Wall Street expectations, and its shares rose about 8% in extended trading, CNBC reported.
What happened
AMD said in its earnings release, also filed with the U.S. Securities and Exchange Commission, that revenue for the quarter ended Sept. 26 beat the high end of its own guidance. Analysts polled by LSEG, the financial data provider, had expected $13.09 billion, according to CNBC. Adjusted earnings were $2.09 a share, against the $1.95 analysts had forecast and up from $1.20 a year earlier.
On a standard accounting (GAAP) basis, net income nearly doubled to $2.4 billion, or $1.46 a share, from 75 cents a year earlier. Operating income rose 123% to $2.8 billion, and gross margin widened two percentage points to 54%.
“We delivered a record quarter with revenue exceeding the high end of our guidance,” Lisa Su, AMD’s chair and chief executive, said in the release, crediting demand for the company’s data center products.
Data center surge, weaker gaming
The data center segment, which sells EPYC server processors and Instinct AI accelerators, posted record revenue of $8.5 billion, up 97% from $4.3 billion a year earlier. CNBC noted that the unit now accounts for 64% of AMD’s total sales, up from 47% a year ago.
The rest of the business was mixed:
- Client (PC processors): $2.9 billion, up 7%.
- Gaming (chips for game consoles and graphics cards): $773 million, down 40%.
- Embedded (chips for industrial, automotive and communications equipment): $1.1 billion, up 29%.
On the earnings call, Su said the third quarter was the first in which AMD shipped its MI455 accelerators and Helios racks for revenue, according to a transcript published by Investing.com. Helios is AMD’s rack-scale system, which bundles dozens of AI chips, server processors and networking into a single unit, in competition with Nvidia’s rack systems. AMD said Anthropic, Meta, Microsoft, OpenAI and Oracle’s cloud unit are running models on the first Helios systems.
“We expect Helios deployments to increase substantially in the fourth quarter as production continues to ramp,” Su told analysts.
Why it matters
The results come at a nervous time for chip stocks. AMD shares had fallen for three straight sessions before the report amid an industry-wide selloff driven by fears of overspending on AI, CNBC reported. Rival Intel’s stock fell 29% last Friday on weak guidance, even though its own data center revenue had jumped 78%. AMD’s stock has more than doubled this year, according to CNBC.
Su gave an aggressive view of next year. Based on current visibility, she said, AMD now expects total revenue to grow more than 80% in 2027, with data center products making up more than 80% of sales. She also said she expects server processor revenue to double, driven mainly by unit volumes and core counts rather than higher prices.
She acknowledged that “demand is higher than supply” but said AMD has secured more wafers, packaging, memory and other components to support that growth.
What comes next
AMD’s fourth-quarter forecast of about $17 billion, plus or minus 3%, compares with the $16.2 billion average analyst estimate, according to CNBC. At the midpoint, it would mark 66% growth from a year earlier. Jean Hu, AMD’s chief financial officer, guided to an adjusted gross margin of about 55%, slightly below the 55.3% estimate compiled by StreetAccount, a market data service. Hu said the fourth quarter should be the first in which AMD’s data center AI business brings in more revenue than its server processor business.
The PC side faces a tougher outlook. Su said AMD is planning for PC unit shipments across the market to fall by a double-digit percentage in 2027, as higher memory and component costs weigh on the industry. She said AMD is sharing those cost increases with customers through long-term agreements.
AMD has also been spending heavily to extend its reach. It agreed in September to buy World Labs, an AI startup, in an $8.2 billion all-stock deal, and it has committed up to $5 billion to Anthropic, CNBC reported.
