At a Glance
- AMD exceeded Wall Street expectations for both revenue and earnings per share in the third quarter.
- The company provided a fourth-quarter revenue forecast that surpassed analyst estimates.
- AMD announced significant AI infrastructure partnerships, including a strategic agreement with OpenAI.
- Growth was observed across AMD’s data center, client, and gaming segments.
- The company introduced new PC, gaming, and embedded processors, alongside updates to its software and AI offerings.
AMD Reports Strong Third-Quarter Results, Exceeding Expectations
Advanced Micro Devices (AMD) has announced its third-quarter financial results, revealing performance that surpassed Wall Street’s predictions for both revenue and earnings per share. However, the company’s gross-margin outlook did not significantly exceed expectations, which contributed to a dip in its stock price during extended trading hours.
The company reported adjusted earnings per share of $1.20, exceeding the consensus estimate of $1.16. Revenue for the quarter reached $9.25 billion, outperforming the projected $8.74 billion, and marking a substantial 36% increase compared to the same period last year.
The third quarter concluded on September 27. AMD recorded a net income of $1.24 billion, or 75 cents per share, a notable increase from the $771 million, or 47 cents per share, reported in the corresponding quarter of the previous year.
Looking ahead to the fourth quarter, AMD has guided for revenue of approximately $9.6 billion, which suggests a year-over-year growth of 25%. This forecast is higher than the analyst expectation of around $9.15 billion.
The company anticipates an adjusted gross margin of 54.5%, aligning with the forecast provided by StreetAccount. AMD reiterated that its guidance does not incorporate any revenue from the shipments of its Instinct MI308 chips to China, maintaining a stance consistent with the previous quarter.
💡 Executives stated during the earnings release, We are not including revenue from China‑bound MI308 shipments in the outlook at this time. Prior to these results, AMD shares had already seen a significant increase, climbing 107% year-to-date, considerably outperforming the Nasdaq’s 21% rise over the same timeframe.
AMD Establishes Key AI Infrastructure Partnerships
In a significant development, AMD has entered into a strategic agreement with OpenAI. This collaboration holds the potential for OpenAI to acquire up to 10% of AMD’s stake. As part of this arrangement, OpenAI plans to deploy 6 gigawatts of AMD Instinct GPUs across multiple chip generations, signaling a major commitment to AMD’s AI hardware solutions.
The initial deployment phase of 1 gigawatt is slated for the second half of next year. Historically, AI developers like OpenAI have predominantly relied on Nvidia GPUs for training and operating large-scale AI models. This new partnership indicates a growing diversification in the AI hardware supply chain and ecosystem, with AMD emerging as a key player.
Further expanding its reach in the AI sector, Oracle announced in October its intention to deploy 50,000 AMD Instinct MI450 chips within its cloud infrastructure next year. AMD also unveiled its innovative Helios rack-scale design, which supports the Open Rack Wide standard developed by Meta and introduced at the Open Compute Project Global Summit.
⚡ In tandem with these advancements, the collaborations are multiplying. Cisco and AMD are intensifying their partnership with G42 to construct a large-scale AI cluster in the UAE, utilizing AMD Instinct MI355X GPUs. IBM and AMD have also announced a multi-year initiative to provide Zyphra with clusters powered by AMD Instinct MI350X GPUs, designed for advanced multimodal models.
Cohere is increasing its utilization of AMD Instinct GPU infrastructure across its enterprise product lines. Vultr has confirmed that AMD Instinct MI355X GPUs are now accessible throughout its cloud network, offering enhanced performance for its clients.
DigitalOcean is broadening its cloud offerings, incorporating AMD Instinct MI325X immediately and planning to add MI350X later in the year. Tech Mahindra will integrate AMD Instinct GPUs and AMD EPYC CPUs into its Cloud BlazeTech platform, further solidifying AMD’s presence in cloud computing services.
✅ The U.S. Department of Energy has revealed plans for two upcoming supercomputers that will feature AMD hardware. The Lux AI system will be equipped with AMD Instinct MI355X GPUs, AMD EPYC CPUs, and AMD Pensando networking technologies, pointing to significant government adoption of AMD’s high-performance computing solutions.
📍 The Discovery system, scheduled for deployment in 2028, will leverage next-generation AMD EPYC Venice CPUs and AMD Instinct MI430X GPUs, part of AMD’s new MI400 Series. This indicates a long-term strategic investment in AMD’s evolving hardware architecture by leading research institutions.
Broad Growth Across Data Center, Client, and Gaming Segments
AMD’s data center business demonstrated robust performance in the third quarter, generating $4.34 billion in revenue, a 22% increase, surpassing the analyst expectation of $4.13 billion. The client segment also experienced significant growth, with revenue reaching $2.75 billion, up 46%, exceeding the consensus estimate of $2.61 billion.
📌 The gaming segment posted remarkable results, with revenue totaling $1.30 billion, an impressive 181% year-over-year increase, well above the $1.05 billion estimate. In a notable market move, Amazon, a significant cloud customer, disclosed in a filing that it had divested all of its 822,234 AMD shares as of September 30. This position had initially been acquired in the first quarter.
To further enhance AI capabilities, AMD released its ROCm 7 software, designed to improve both training and inference performance for AI models. Concurrently, the company finalized the divestiture of its ZT Systems data center manufacturing division to Sanmina, focusing its strategic resources on core semiconductor and AI technologies.
📊 AMD’s partner ecosystem continues to expand cloud services powered by the 5th Gen AMD EPYC processors. Amazon Web Services (AWS) highlighted that its new Amazon EC2 M8a instances offer up to a 30% performance improvement compared to the previous generation, underscoring the efficiency gains offered by AMD’s latest offerings.
Oracle has introduced new X11 platforms designed to harness the power of these processors. Furthermore, IBM and AMD have outlined plans to integrate quantum computing with high-performance computing in future architectural designs, aiming to push the boundaries of computational power for complex scientific and AI challenges.
💡 AMD has also refreshed its PC and gaming product lines with the introduction of Ryzen Threadripper 9000WX, Threadripper PRO 9000X, and FSR 4. The adoption of FSR 4 technology has expanded significantly, now supporting over 85 games, enhancing visual fidelity and performance for a wider player base.
The company has extended its embedded product offerings with the launch of AMD EPYC Embedded 4005 and Ryzen Embedded 9000 processors, targeting industrial and edge computing applications that demand reliable and powerful processing capabilities.
Expert Summary
AMD demonstrated strong third-quarter financial performance, exceeding revenue and earnings expectations. The company is strategically positioning itself in the AI market through significant partnerships and expanded hardware offerings.
With robust growth across its key business segments and a positive outlook for the upcoming quarter, AMD is set to continue its trajectory in the competitive technology landscape.