AMD posts a record quarter as data center sales nearly double, and guides to about $17 billion
Demand for AI accelerators and server processors pushed AMD's data center revenue up 97%, and its fourth-quarter forecast came in well above what Wall Street expected.
AMD's data center business now accounts for nearly two-thirds of its revenue
AMD closed Tuesday's session with a set of numbers that explain why investors keep paying attention to the AI chip race. The company reported record third-quarter revenue of $13.4 billion, up 45% from a year ago and above the high end of its own guidance. Adjusted earnings came in at $2.09 a share against analyst estimates of roughly $1.94, and the stock jumped more than 7% in after-hours trading, according to Investing.com and market wraps.
The data center business did the heavy lifting. Segment revenue hit a record $8.5 billion, up 97% from a year earlier and up 27% from the previous quarter, AMD said in its earnings release. That segment made up 64% of total sales, compared with 47% a year ago. The company credited strong demand for its EPYC server processors and the first sales of its Instinct MI450 series of AI accelerators.
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CEO Lisa Su told analysts that the quarter was the first in which AMD shipped its MI455 chips and Helios rack-scale systems for revenue, and she called it a very major milestone. Helios is AMD's rack-scale system, which packages accelerators into a single unit for large cloud and AI customers.
Not every part of the business looked as healthy. Combined revenue from the client and gaming segments, which covers PC chips and graphics, was $3.72 billion, down 8% from last year, according to a breakdown of the report. In other words, the growth story at AMD right now is almost entirely about servers and AI.
The forecast is what made the stock move. AMD expects fourth-quarter revenue of about $17 billion, give or take 3%, versus a Wall Street consensus near $16.2 billion. At the midpoint that would be growth of roughly 66% from a year earlier. Adjusted gross margin is expected to land around 55%, a touch below the 55.5% analysts had penciled in, per BigGo Finance. Su said growth should accelerate further as the company scales up Helios systems and its next-generation "Venice" server processors.
The comparison with Intel is hard to miss. ServeTheHome noted that Intel reported data center revenue of $7.3 billion last week, up 78%, while AMD's segment grew faster and is now larger. In data center chips, AMD has moved ahead on both growth and size.
The report landed on a day when tech stocks were under pressure over high valuations and doubts about how quickly AI spending will pay off. Apple slid after warning about margins, and Palantir lost ground even after beating estimates, Yahoo Finance reported. AMD's results offered a counterpoint: the money flowing into AI infrastructure is still showing up in chipmakers' sales. The fourth quarter, when AMD has to scale up Helios and Venice production, will show how durable that is.