AMD beats earnings estimates as data center sales surge to 13.38 billion

Advanced Micro Devices Inc. posted third quarter results on Tuesday that exceeded analyst expectations, triggering a 7 percent rise in its stock price during after hours trading. The company’s total revenue climbed 45 percent year over year to reach 13.38 billion dollars, surpassing the consensus estimate of 13.09 billion dollars. Adjusted earnings per share landed at 2.09 dollars, outpacing the forecast of 1.95 dollars.

The surge in revenue was primarily fueled by the data center segment, which now represents 64 percent of AMD’s total income. A year ago, that segment accounted for 47 percent of the company’s earnings. CEO Lisa Su stated in a press release that growth in data center processors is expected to accelerate. She cited the company’s product portfolio and supply chain relationships as key factors for sustaining profitability.

This financial performance follows a volatile period for the stock. AMD shares hit a record high in October before suffering three consecutive days of losses. Investors had expressed concern about overspending in the artificial intelligence industry. The recent turnaround aligns with trends seen at rival Intel, which reported a 78 percent increase in data center revenue. However, Intel’s stock fell 29 percent on Friday due to weak future guidance.

While data centers drove growth, AMD’s traditional markets struggled. Revenue from its combined PC and gaming chip segment dropped 8 percent to 3.7 billion dollars. Gaming revenue specifically declined by 40 percent. Global PC shipments fell 4 percent in the second quarter, according to Counterpoint Research, a trend attributed to rising component costs.

Looking ahead, AMD projects fourth quarter revenue of approximately 17 billion dollars. This figure exceeds the average analyst estimate of 16.2 billion dollars. The company also expects a gross margin of 55 percent for the upcoming quarter, a slight decrease from the 55.3 percent average estimate.

AMD is expanding its hardware footprint to compete with Nvidia’s offerings. Its Helios rack scale systems are being deployed by major tech firms including Meta, Microsoft, Anthropic, OpenAI, and Oracle. Meta confirmed last week that its Helios racks are operational. AMD also agreed to invest 1 billion dollars in Meta’s equity offering and has committed up to 5 billion dollars to Anthropic, which is preparing for a potential initial public offering.

Supply chain expansion remains a priority for the company. Lisa Su indicated during a visit to Taiwan in October that plans are in place to substantially increase supply in 2027. Both AMD and Nvidia executives have made multiple trips to South Korea and Taiwan this year to meet with suppliers like TSMC, SK Hynix, and Samsung. In September, AMD announced an 8.2 billion dollar all stock acquisition of World Labs, a San Francisco based AI lab founded by Fei Fei Li.