- AMD beat on both lines. Advanced Micro Devices reported third-quarter adjusted earnings of $2.09 per share on revenue of $13.38 billion, ahead of LSEG estimates of $1.95 and $13.09 billion. Revenue rose 45% from $9.25 billion a year earlier, and the stock was up 8% in extended trading.
- Data center is now the business. The segment made up 64% of revenue, up from 47% a year ago, which works out to roughly $8.6 billion versus about $4.3 billion, or growth of about 97%, by our calculation. CEO Lisa Su said she expects server revenue to double year over year in 2027 and data center AI growth to accelerate even faster than AMD projected 90 days ago.
- The guide is the bigger surprise. AMD expects about $17 billion in fourth-quarter revenue, beating the $16.2 billion average estimate, according to LSEG, and implying roughly 27% sequential growth by our calculation. Gross margin is expected at 55%, slightly below the 55.3% StreetAccount estimate.
- AMD is pulling away from Intel’s problems. Intel shares plunged 29% on Friday on weak guidance despite 78% data center growth, and both companies are exposed to a PC market where shipments fell 4% in the second quarter, according to Counterpoint Research. AMD’s combined PC and gaming segment fell 8% to $3.7 billion, but its server CPUs are benefiting from agentic AI demand.
What Happened?
AMD reported results on Tuesday that topped Wall Street expectations on earnings, revenue and guidance. Su said on the earnings call that AMD has “worked across our supply chain to secure the wafers, substrates, advanced packaging, memory, and other key components needed to support much higher growth next year.” Neocloud stocks CoreWeave and Nebius rallied earlier Tuesday and stayed higher after the report. Gaming revenue fell 40% from a year earlier. The stock is up more than 125% this year but had fallen for three straight days before Tuesday’s rally amid an industrywide sell-off on fears of AI overspending.
Why It Matters?
The quarter shows AMD is winning on two fronts in AI. Its server CPUs are seeing a major resurgence because they power the virtual machines behind agentic AI apps such as Meta’s Muse, and Su said “adoption is just starting.” In GPUs, its Helios rack-scale systems compete directly with Nvidia’s Grace Blackwell and Vera Rubin systems, and Meta, Microsoft, Anthropic, OpenAI and Oracle are all beginning to use them. A guide that is $800 million above consensus also pushes back against the AI-spending fears that hit chip stocks in recent days.
What’s Next?
Supply is the key variable for 2027. Su said in October that she plans to “substantially increase our supply in 2027,” and she and Nvidia CEO Jensen Huang have both visited suppliers such as TSMC, SK Hynix and Samsung this year. Investors will also track AMD’s strategic bets, including a $1 billion investment in Meta’s equity offering, a commitment of up to $5 billion in Anthropic ahead of its potential IPO, and the $8.2 billion all-stock acquisition of World Labs. The slightly light 55% margin guide is the number to watch if memory and component costs keep rising.
Affected Tickers and Coins: AMD, NVDA, INTC, CRWV, NBIS
Source: CNBC
