AMD shares jump 7% in extended trading on Tuesday after the chipmaker reported third-quarter revenue of $13.38 billion, beating Wall Street expectations as sales of artificial intelligence processors and data centre hardware nearly doubled from the previous year.
Key points
- Third-quarter revenue rose 45% year on year to $13.38 billion, topping analyst estimates of $13.09 billion.
- Data centre sales nearly doubled from a year earlier, accounting for 64% of total revenue.
- Fourth-quarter revenue guidance of approximately $17 billion beat consensus forecasts of $16.2 billion.
- Personal computer and gaming segments remained subdued, with gaming revenue falling 40%.
Data centre business drives quarterly beat
Advanced Micro Devices posted adjusted earnings per share of $2.09 for the third quarter, topping the $1.95 consensus estimate compiled by LSEG. Total revenue climbed 45% to $13.38 billion from $9.25 billion in the same quarter last year, according to the company’s third-quarter financial statement.
The expansion came almost entirely from the data centre division. That unit now makes up 64% of AMD’s total business, up from 47% twelve months ago. Cloud providers and artificial intelligence laboratories bought both graphics processors and traditional server chips in large volumes throughout the quarter.
Lisa Su, AMD’s chief executive, said in a statement that she expects growth in data centre processors to “accelerate further” through the end of the year, adding that the company has secured sufficient manufacturing capacity to satisfy orders.
AMD projected fourth-quarter revenue of around $17 billion, comfortably above the average analyst estimate of $16.2 billion. The company forecast a gross margin of 55% for the period, marginally below Wall Street expectations of 55.3%.
Server processors gain from agentic AI
While the initial phase of the AI boom focused heavily on training clusters packed with graphics processors, the rise of agentic software has created renewed demand for central processing units. Applications such as Meta‘s Muse require server CPUs to spin up virtual machines that execute tasks independently for hours at a time.
That workload shift helped propel AMD shares to a record high in October. After years of chasing Nvidia in graphics silicon, AMD has captured lucrative server CPU contracts because cloud operators run these autonomous software agents alongside dedicated accelerator cards.
Cloud hyperscalers have directed an increasing share of their capital budgets toward these hybrid server architectures. As hyperscalers fund AI data centres across North America and Europe, server component suppliers have seen backlog orders stretch into late 2027.
AMD has also expanded beyond individual components by selling complete rack-scale systems under the Helios brand. These systems compete directly with Nvidia’s Grace Blackwell and Vera Rubin platforms, combining processors, network links and memory into unified units.
Helios deployments and tech partnerships
Technology companies including Meta, Microsoft, Oracle, OpenAI and Anthropic have begun installing Helios racks in their facilities. Meta confirmed last week that its initial installations are operational. The deployment follows a commercial tie-up in which AMD put $1 billion into an equity sale by Meta.
AMD has similarly backed Anthropic, pledging up to $5 billion to the artificial intelligence startup ahead of its planned initial public offering. The startup unveiled its prospectus in late October. These strategic pacts help secure long-term buyer interest for AMD’s server platforms as tech giants expand their compute facilities.
To bolster its software ecosystem and spatial computing capabilities, AMD agreed in September to purchase San Francisco startup World Labs for $8.2 billion in an all-stock deal. Founded by computer scientist Fei-Fei Li, World Labs builds three-dimensional world models designed to train autonomous systems and robotics software.
Contrast with Intel and PC market strain
AMD’s performance contrasted sharply with rival Intel, which posted third-quarter results last week. While Intel’s data centre sales rose 78%, its shares fell sharply after the company issued disappointing fourth-quarter guidance and raised doubts about its production output. Investors penalised the stock after Intel’s revenue forecast missed expectations.
Both x86 chipmakers continue to struggle with weak consumer demand for desktop and laptop computers. AMD combines its client PC chip sales and gaming processors into a single reporting segment, where revenue dropped 8% year on year to $3.7 billion. Gaming sales dropped 40% as console hardware cycles matured.
Component inflation has compounded the PC slowdown. Worldwide PC shipments fell 4% in the second quarter compared with the previous year because of steep price rises for dynamic random-access memory and solid-state storage, according to data from Counterpoint Research. Competition from Arm-based laptop chips designed by Apple and Qualcomm has also pressured traditional processor sales.
Supply chain expansion plans
AMD’s stock had dropped for three straight trading sessions prior to Tuesday’s earnings release, caught in a broader market pullback driven by investor anxiety over whether cloud providers can monetise their capital expenditure. The after-hours jump erased those losses, leaving AMD shares up roughly 125% over the course of 2026.
Meeting customer commitments remains dependent on packaging and memory capacity in East Asia. Su travelled to Taiwan in October, telling industry partners that AMD intends to increase its production allocations substantially during 2027.
Executive teams from both AMD and Nvidia have held frequent meetings with contract manufacturer Taiwan Semiconductor Manufacturing Company, as well as memory producers SK Hynix and Samsung Electronics. High-bandwidth memory availability remains a key bottleneck for Helios racks, which will rely partly on new packaging facilities such as the Samsung Texas chip plant scheduled to supply domestic data centre customers next year.
AMD will hold its fourth-quarter earnings conference call in late January 2027 to update investors on Helios deliveries and initial 2027 supply contracts.
