The data center unit now supplies 64% of what AMD sells. A year ago it supplied 47%, and that shift is the whole story of the quarter reported on Tuesday.
The rest of the business got smaller. Chips for PCs and gaming, which AMD reports as one segment, brought in $3.7 billion, 8% less than a year earlier, with the gaming part down 40%. Servers carried everything.
Key numbers
- $13.38 billion in third-quarter revenue, above the $13.09 billion analysts polled by LSEG had estimated and up from $9.25 billion a year earlier
- $2.09 in adjusted earnings per share, above the $1.95 estimate
- 64% of total revenue from the data center segment, against 47% a year earlier
- 7% gain in the shares in extended trading on Tuesday, according to CNBC
The guidance mattered as much as the quarter
For the current quarter AMD pointed to roughly $17 billion in revenue, above the $16.2 billion average estimate compiled by LSEG. It also pointed to a gross margin of 55%, a touch under the 55.3% average estimate tracked by StreetAccount. Gross margin is the share of revenue left once the cost of making the chips is taken out.
Chief executive Lisa Su said in a statement that she expects growth in data center processors to "accelerate further," and that supplying the demand would not be a problem. MarketWatch framed the report as evidence of real revenue arriving from AI work rather than promised revenue.
In plain words: a company's results move its share price against what the market had already assumed, not against zero. Two numbers do that work here: what the quarter delivered versus the published estimates, and what management says the next quarter will bring. When both land above the estimates, the reaction tends to be larger than the size of the figures alone suggests.
Intel grew its data center faster and still fell 29%
Days before AMD reported, Intel disclosed data center growth of 78% for the same quarter, CNBC reported. Its stock dropped 29% on Friday on concerns about weak guidance and about whether it could meet the demand it described. The contrast is the point: faster segment growth, a much worse reception.
Both companies sell into the same soft PC market. Global PC shipments fell 4% in the second quarter from a year earlier as memory and other component costs climbed, according to Counterpoint Research, and Intel blamed that market for its outlook.
AMD shares are up about 125% this year and hit a record in October. They had fallen for three straight sessions before Tuesday, during an industry-wide sell-off driven by fears of overspending on AI.
Where the server demand is coming from
AMD's central processing units have found a new use in agentic AI applications such as Meta's Muse, which run virtual machines and can work unattended for hours. That is a different product line from the graphics processors where AMD has spent years behind Nvidia.
It competes there too. AMD's rack-scale systems, called Helios, go up against Nvidia's Grace Blackwell and Vera Rubin, and Meta, Microsoft, Anthropic, OpenAI and Oracle have all started deploying them. Meta said last week its Helios racks were running.
The company is also spending to keep those customers close. AMD agreed to buy $1 billion of equity in Meta's offering, committed up to $5 billion to Anthropic, and in September agreed to acquire the AI lab World Labs for $8.2 billion in stock. On a trip to Taiwan in October, Su said she planned to "substantially increase our supply in 2027," and both she and Nvidia's Jensen Huang have visited suppliers including TSMC, SK Hynix and Samsung this year.
Neither report I read gives a date for AMD's next results, and Anthropic's prospectus, filed last week, carries no listing date either.