AMD Beats Its Range and Guides to $17 Billion

SANTA CLARA, Calif., Nov. 3 — AMD’sAMD’s revenue rose 45 percent to $13.38 billion in the three months to Sept. 26, above the top of its own forecast, and the chipmaker said on Tuesday that it expects about $17 billion in the current quarter.The RangeIn August, AMD forecast third-quarter revenue of “approximately $13 billion, plus or minus $300 million.” Analysts polled by LSEG expected $13.09 billion, CNBC reported. Its Data Center segment had record revenue of $8.55 billion, up 97 percent from a year earlier.

Lisa Su, the chief executive, then raised her sights for next year. AMD now expects revenue to grow more than 80 percent in 2027, Ms. Su told analysts on the company’s call, more than twice the long-term model it set out at its financial analyst day a year ago.

AMD reported into a week in which chip shares had sold off on what CNBC called “industrywide fears of overspending on AI infrastructure.” Its own stock fell for three straight sessions, from $578.44 at the close on Oct. 28 to $466.84 on Monday, then rose 3.65 percent to close Tuesday at $483.90, before the report. In extended trading after the report, the shares touched $530.38 at 4:42 p.m. and were at $508.20 at 7:59 p.m., up 5.02 percent, by Nasdaq’s record; in trading before the open on Wednesday they stood at $517.46 at 5:10 a.m., up 6.94 percent, according to CNBC.AMDNasdaq508.58▲59.54+13.3%Advanced Micro Devices · Monday’s session The quarter also shows what the growth costs: a warrant charge that rises with AMD’s share price, $3 billion of inventory built ahead of shipment, thinner cash flow, and PC buyers squeezed by dearer memory.

For the fourth quarter, Jean Hu, the chief financial officer, said on the call that AMD expects “a sharp increase in our Data Center segment of approximately 50% growth” from the third, offset by “a decline in our Client and Gaming segment of greater than 20%,” according to a transcript published by Stock Analysis. Growth of 50 percent would take Data Center revenue to about $12.8 billion, by our arithmetic. The segment’s operating income in the third quarter was $2.88 billion, up 168 percent, a margin of 34 percent against 25 percent a year earlier.Data CenterAMD’s Data Center segment includes AI accelerators, server processors, graphics processors, networking cards and adaptive chips for data centers. Ms. Su said it made up 64 percent of revenue in the third quarter, up from 47 percent a year earlier.

AMD’s release names Anthropic, Meta, Microsoft, OpenAI and Oracle Cloud Infrastructure as “running models and workloads on the first AMD Helios rackscale solutions,” its rack-scale systems built on MI450-series GPUs and EPYC processors. Ms. Su said AMD began shipping its MI455X “in volume in the quarter” and expects “Helios deployments to increase substantially in the fourth quarter.” Asked by Tom O’Malley of Barclays whether demand would outstrip supply, she said, “It is true that demand is higher than supply,” and that AMD was working with its suppliers to add more. She said the fourth quarter would be the first in which its data-center AI business is larger than its server-processor business.

The Bill

Diluted earnings were $1.46 a share under standard accounting and $2.09 on AMD’s adjusted measure, against $1.95 expected by analysts polled by LSEG, CNBC reported. The largest item between the two is a $1.097 billion charge, 66 cents a share, for the remeasurement of “warrants issued to certain customers,” which AMD says is “driven by changes in AMD’s stock price and other valuation assumptions.”

AMD does not name the customers, or split the charge among them. It has filed two customer warrants: OpenAI’s, of October 2025, and Meta’s, of February 2026. Each is for up to 160 million AMD shares at a penny each, vesting in tranches as the customer buys Instinct GPUs, the first on the initial gigawatt and the full amount on six gigawatts.The Price TargetsVesting under each warrant is also subject to AMD stock-price targets that “escalate to $600 per share for the final tranche.” AMD’s average share price in the third quarter was $511, by its own slides. “In the third quarter, we began recognizing the accounting impact of warrants issued under our previously announced customer agreement as we shipped MI450 series GPUs,” Ms. Hu said. She said the remeasurement charge would grow as AMD and its customers progress under the agreement, but does not touch the adjusted results or free cash flow. A separate cost, a reduction in revenue for the warrants, is already in the reported figures: AMD had “already incorporated the warrant revenue reduction piece,” she said; AMD does not expect the warrants to add to its share count in the fourth quarter.

Inventories rose to $11.46 billion on Sept. 26 from $8.47 billion at the end of June, and free cash flow fell to $554 million from $1.56 billion in the second quarter. Ms. Hu said the inventory was built “to fulfill our strong data center demand.” AMD expects its adjusted gross margin to slip to about 55 percent this quarter, from 56 percent; StreetAccount’s average estimate was 55.3 percent, CNBC reported.

The PC

Client and Gaming revenue fell 8 percent, to $3.72 billion, and Gaming alone fell 40 percent, to $773 million, on lower semi-custom and graphics sales. Client revenue rose 7 percent from a year earlier, to $2.95 billion, but fell 4 percent from the second quarter, which Ms. Hu put down to memory costs. “PC sell-through slowed late in the quarter as higher memory and component costs weighed on demand,” Ms. Su said.

“In 2027, we are planning for PC market unit shipments to decline by a double-digit percentage,” Ms. Su said. In that market, she said, AMD expects to outperform.

In 2027, we are planning for PC market unit shipments to decline by a double-digit percentage.

Asked by Joshua Buchalter of TD Cowen whether AMD could pass on the rising cost of high-bandwidth memory, Ms. Su said it had long-term agreements with some suppliers and customers. “We are also working with our customers to ensure that those costs are shared as we go forward,” she said.

AMD has also agreed to buy World Labs, a model-research company, and Taalas, a maker of inference chips; both deals are expected to close by the end of 2026, subject to regulatory approvals. Ms. Hu said AMD would give guidance in 2027 on when the warrants’ vesting and exercise conditions are met; its quarterly report to the S.E.C. had not reached EDGAR by 5:30 a.m. on Wednesday. Qualcomm and Arm report after the close on Wednesday, and Nvidia on Tuesday, Nov. 17.