AMD has published its financial results for the third quarter, beating Wall Street expectations. Total revenue reached $13.38 billion against the analysts' consensus forecast of $13.09 billion, up 45% year-over-year from $9.25 billion. Adjusted earnings per share came in at $2.09 compared to the expected $1.95. In extended trading, the company's stock jumped 8%, and since the beginning of the year, its value has risen by approximately 125%, despite a brief three-day drop prior to the report's release amid industry concerns over excessive artificial intelligence spending.
Data Centers Become the Main Driver
The key factor in the earnings report was the data center chip segment, where sales nearly doubled year-over-year. Data centers now account for 64% of the company's total revenue, compared to 47% a year ago. CEO Lisa Su stated that server revenue will double year-over-year by 2027, and growth in data center AI solutions will accelerate faster than the company itself projected 90 days ago. She noted that this segment will become the primary driver of revenue and profit growth, with AMD aiming to substantially scale up supply volumes in 2027.
Client Segment Grows, Gaming Declines
In the client division, revenue from Ryzen PC and laptop processors grew 7% year-over-year to $2.949 billion. This growth was primarily driven by strong sales of mobile Ryzen processors for laptops and mini-PCs rather than desktop chips. A completely different picture emerged in the gaming segment, which includes graphics processors for video cards and semi-custom console chips: it shrank by 40%, generating only $773 million. AMD attributes the downturn to an overall decline in sales of gaming devices, which have become significantly more expensive over the past year.
Competition with Nvidia and Contrast with Intel
Striving to catch up with Nvidia in the AI graphics processor segment, AMD is experiencing a new surge driven by the development of AI agent applications: in October, demand for agentic AI helped push the company's shares to record highs. AMD produces data center GPUs and comprehensive Helios rack systems that directly compete with Nvidia's Grace Blackwell and Vera Rubin solutions; Helios systems are already being deployed in data centers by Meta*, Microsoft, Anthropic, OpenAI, and Oracle. A clear contrast with its main CPU market rival is visible: Intel also reported rising data center revenue in its financial earnings — up an immediate 789% — yet its shares dropped 29% as the company admitted it was unable to satisfy demand.
Q4 Forecast and Strategic Deals
AMD's own forecast for the fourth quarter projects $17 billion in revenue, higher than the average analyst estimate of $16.2 billion; expected gross margin is 55%, compared to the analyst consensus of 55.3%. Strategically, the company continues to strengthen its position in the AI ecosystem: AMD has committed to investing $1 billion in Meta* and $5 billion in Anthropic, and in late September announced the $8.2 billion acquisition of World Labs, a lab specializing in spatial AI and "world models." Taken together, these moves highlight the company's bet on server and AI sectors as the foundation for future growth.
* Included in the list of public associations and religious organizations for which a court has made a finalized decision on liquidation or prohibition of activities.
