AMD's $13.4 Billion Quarter Puts 'Real' Revenue Behind the AI Trade

Advanced Micro Devices pulled in $13.4 billion in third-quarter revenue, up 45% year on year, and its shares climbed more than 7% in Wednesday's premarket trading. The beat came against a tough backdrop for AI-related stocks, and investors read it as proof that the AI buildout still pays.

The numbers cleared Wall Street's bar with room to spare. Analysts tracked by FactSet had modeled $13.1 billion in revenue and $1.95 in adjusted earnings per share. AMD delivered $2.09, a 74% jump from a year earlier.

Where did the growth come from?

The data-center segment did the heavy lifting. Revenue there hit $8.5 billion, up 97% from a year ago, beating the $8.2 billion analysts expected. AMD said customers are increasingly buying both its graphics processing units and its server central processing units — two key building blocks of the AI ecosystem.

CEO Lisa Su said data-center growth should accelerate further this quarter. Production is ramping on Helios, AMD's first rack-scale solution, and on the next-generation Venice CPUs.

"There was plenty of skepticism around AI spending heading into the print, but AMD gave the market a reason to stay with the trade," Jake Behan, head of capital markets at ETF provider Direxion, said in emailed comments.

Behan argued the report showed ongoing demand for AI infrastructure and, in his word, "real" revenue — the thing chip investors have been hunting for after a rough stretch for the sector.

How did the rest of the AI trade react?

The rally spread beyond AMD before the opening bell. Arm Holdings, the CPU designer, rose 2.5%. Nvidia climbed close to 1%. Intel gave up an initial gain and slipped fractionally.

Super Micro Computer added fuel on Tuesday afternoon, posting upbeat results of its own and delivering what amounted to another vote of confidence in AI hardware demand. AMD shares had already gained almost 4% on Tuesday ahead of the print.

Emarketer analyst Jacob Bourne agreed the chipmaker's performance "will give investors encouragement" across the broader AI universe.

What's the guidance telling us?

AMD forecast $17 billion in total fourth-quarter revenue, ahead of the $16.3 billion consensus. The company also projected that data-center GPU revenue could surpass server CPU revenue in the fourth quarter — a milestone for its AI accelerator business.

Looking further out, AMD targets 80% revenue growth for the overall business next year. FactSet analysts had been modeling about 77%.

Su said the company has "very good visibility" into land, power and other constraints that could otherwise stop customers from deploying AMD chips on schedule.

What about the PC business and Intel?

The comparison with Intel flatters AMD. Intel shares fell 29% in the session after its earnings report last week, wiping out $140 billion in market capitalization. Its December-quarter guidance missed expectations, partly on weakness in PCs, and its client-computing group reported a revenue miss.

"We believe investor expectations had been lowered significantly following Intel's weak guidance last week, despite a constructive view on AMD's overall momentum," Goldman Sachs analysts led by James Schneider wrote in a note.

AMD wasn't immune to the soft PC market. Client-computing revenue came in at $2.9 billion, slightly below the $3 billion FactSet consensus. But Su said on the earnings call that AMD expects to outperform the broader PC market in the near future, targeting the enterprise and premium segments where the company believes it adds the most value.

With Helios and Venice scaling into the current quarter and a forecast that assumes faster data-center growth, AMD has set a high bar for the December quarter — and given AI investors a fresh reason to hold the trade.