AMD posts record quarter as AI chip demand outpaces supply

Advanced Micro Devices reported record quarterly revenue of $13.4 billion late Tuesday, up 45 percent from a year earlier, as sales of chips used in AI data centers nearly doubled and pushed the company's results above the high end of its own guidance for a fifth consecutive quarter. Shares rose as much as 8 percent in extended trading before paring some of the gain, a swing that underscored how closely investors are now tracking whether AI infrastructure spending can keep growing at its current pace.

The results, filed with the Securities and Exchange Commission, showed AMD's Data Center segment generated $8.5 billion in revenue, up 97 percent year over year and now accounting for 64 percent of total sales, compared with 47 percent a year ago. Non-GAAP earnings per share came in at $2.09, ahead of Wall Street estimates that had clustered near $1.95, while GAAP diluted earnings per share of $1.46 reflected a one-time non-cash charge tied to warrants the company has granted to major customers.

The numbers

Beyond the data-center jump, AMD's Embedded segment, which serves aerospace, defense, automotive and industrial customers, grew 29 percent to $1.1 billion. Client and Gaming revenue combined fell 8 percent to $3.7 billion, as a 40 percent drop in Gaming — tied to weaker semi-custom console and graphics-card sales — offset a 7 percent gain in PC-chip revenue. Non-GAAP gross margin was 56 percent, and the company ended the quarter with $15.8 billion in cash and short-term investments against $7.1 billion in debt, according to the investor presentation filed alongside the earnings release.

For the fourth quarter, AMD guided to roughly $17 billion in revenue, plus or minus 3 percent — above the roughly $16.2 billion to $16.3 billion analysts had expected — with gross margin holding near 55 percent. Chief Executive Lisa Su said demand for the company's newest chips had outrun its ability to supply them.

"Adoption is just starting, and we expect demand to grow sharply."

Where the growth is coming from

The quarter marked the first full period of shipments for AMD's Instinct MI450 series GPUs and the "Helios" rack-scale systems built around them, which pair the new accelerators with AMD's sixth-generation EPYC server processors. According to the company's own earnings release posted to its investor-relations site, Anthropic, Meta, Microsoft, OpenAI and Oracle Cloud Infrastructure are among the companies now running workloads on the first Helios deployments, positioning the systems as rivals to Nvidia's Grace Blackwell and Vera Rubin platforms, which still dominate the AI-accelerator market by a wide margin. For comparison, Nvidia's data-center revenue in its most recent reported quarter was roughly $89 billion, close to ten times AMD's figure, though AMD's growth rate has been narrowing the gap over the past year.

AMD's results arrived the same week Intel reported 78 percent data-center revenue growth of its own, yet saw its stock fall sharply on soft guidance — a reminder that in the current market, beating revenue estimates has not been enough on its own to satisfy investors, who are increasingly focused on margins, supply constraints and forward guidance as proxies for how long the AI buildout can keep accelerating.

Who's affected and the reaction

AMD stock had already fallen roughly 13 percent over the prior week amid broader, industrywide unease about the pace and sustainability of AI capital spending, even before Tuesday's report. Shares closed the regular session at $483.90, then climbed as high as 8 percent in after-hours trading before giving back part of that move in premarket trading Wednesday, a pattern that has repeated across several of AMD's recent earnings reports despite consistent beats. The stock remains up well over 100 percent for the year, even after retreating from an October record close.

Chief Financial Officer Jean Hu tied the swings to the scale of the business shift now under way inside the company, telling investors the fourth-quarter outlook "reflects accelerating revenue and earnings growth" as AI-accelerator sales are on pace to overtake traditional server-CPU revenue within the segment. Analysts on the earnings call pressed management on wafer, packaging and high-bandwidth-memory supply constraints, and on whether AMD can defend its roughly 55 percent gross-margin target as it scales production of next-generation "Venice" EPYC chips, which Su described as seeing the strongest early demand of any EPYC generation to date.

What's next

Su told analysts the company expects 2027 revenue growth above 80 percent, more than double its long-term target, with server-chip revenue alone roughly doubling year over year — a bullish forward statement that will now be tested against execution, supply-chain capacity and a PC market management expects to contract by double digits next year. The quarter adds to a run of data points — alongside Intel's report and continuing scrutiny of hyperscaler capital spending — that investors and regulators are using to gauge whether AI infrastructure demand justifies the capital being poured into it, a debate likely to intensify as AMD and its rivals report further results into 2027.