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AMD Beats Q3 Estimates on 97% Data Center Surge, Lifting Tech Stocks After Hours
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Advanced Micro Devices reported third-quarter results after the closing bell on Tuesday that topped Wall Street expectations, and its shares climbed more than 4% in after-hours trading. The beat, led by a record quarter in its data center business and a strong fourth-quarter outlook, gave a lift to technology and chip stocks in extended trading, coming just a week after a steep sell-off in semiconductors.
Revenue for the quarter came in at a record $13.4 billion, up 45% from a year earlier and 16% from the second quarter. Analysts had expected about $13.08 billion, according to Bloomberg. Adjusted earnings were $2.09 per share, up 74% year over year and well ahead of the $1.97 consensus estimate. On a GAAP basis, AMD earned $1.46 per share, which includes a roughly $1.1 billion non-cash charge tied to the remeasurement of a warrant liability.
The data center segment was again the engine of growth. Sales nearly doubled to a record $8.5 billion, up 97% from a year ago and about 27% from the prior quarter, beating estimates of roughly $8.19 billion. Data center now makes up close to two thirds of AMD's total revenue, reflecting strong demand for its Instinct AI accelerators and EPYC server processors as cloud providers and enterprises keep expanding AI infrastructure.
Other segments were mixed. Client revenue rose 7% to $2.9 billion but fell short of the $3.06 billion analysts were looking for. Gaming revenue dropped 40% to $773 million, though that was still above the $655 million estimate. Embedded revenue grew 29% to $1.1 billion.
Profitability improved sharply. Adjusted gross margin was 56%, up two points from a year ago, and adjusted operating income rose 75% to $3.9 billion, an operating margin of 29%.
The outlook was the biggest surprise. AMD guided fourth-quarter revenue to about $17 billion, plus or minus 3%, which implies growth of roughly 66% from a year earlier and about 27% from the third quarter. The company expects adjusted gross margin of about 55%.
Chair and CEO Lisa Su said AMD expects growth to accelerate further in the fourth quarter as it scales production of its Helios rack-scale AI systems and its next-generation Venice server processors. CFO Jean Hu pointed to the record $13.4 billion in revenue and 74% growth in adjusted earnings per share.
The report arrives at a sensitive moment for the sector. Chip stocks fell hard last week after Intel's disappointing guidance sent its shares down nearly 29%, raising worries about how durable the AI spending cycle is. AMD's results and accelerating guidance offer fresh evidence that AI data center demand remains strong, and investors read them as a positive signal for the broader tech group heading into Wednesday's session.
Investors will watch for more detail on the earnings call about AI accelerator shipments, customer commitments for Helios, and whether weakness in PCs and gaming persists into next year.