AMD tops Q3 profit estimates as data center sales nearly double

Advanced Micro Devices (AMD) said on Nov. 3 that third-quarter revenue rose 45% from a year earlier to $13.38 billion, and it expects fourth-quarter revenue of about $17 billion, plus or minus 3%.

Shares rose 1.0% to $488.68 in regular trading as of 3:59 p.m. ET on Nov. 4, from a regular-session close of $483.90.

Non-GAAP earnings per share of $2.09 topped the $1.97 consensus estimate. Revenue of $13.38 billion was above the $13.22 billion consensus estimate.

Here's how the company did:

• Revenue: $13.38 billion vs. $9.25 billion a year earlier, $13.22 billion expected
• Non-GAAP EPS: $2.09 vs. $1.20 a year earlier, $1.97 expected
• GAAP diluted EPS: $1.46 vs. $0.75 a year earlier
• Non-GAAP operating income: $3.92 billion vs. $2.24 billion a year earlier

Revenue was up 16% from the second quarter, when it was $11.54 billion. The company said non-GAAP gross margin was 56%, up from 54% a year earlier.

Segment results

Data Center segment revenue was a record $8.5 billion, up 97% from a year earlier, driven by strong demand for AMD EPYC processors and the launch of AMD Instinct MI450 Series GPUs.

Client and Gaming segment revenue fell 8% to $3.7 billion. Client revenue was $2.9 billion, up 7%, driven by sales of AMD Ryzen mobile processors.

Gaming revenue was $773 million, down 40% from a year earlier, due to lower semi-custom and graphics revenue.

Embedded segment revenue rose 29% to $1.1 billion, led by aerospace and defense, automotive, communications and industrial end markets.

Fourth-quarter outlook

For the fourth quarter, the company expects revenue of approximately $17 billion, plus or minus 3%, and non-GAAP gross margin of approximately 55%.

It expects operating expenses of about $3.75 billion and an effective tax rate of 13% of pre-tax income. Its diluted share count is expected to be about 1.67 billion shares.

"We delivered a record quarter with revenue exceeding the high end of our guidance as Data Center segment sales nearly doubled year-over-year," said Dr. Lisa Su, AMD chair and CEO.

"Our fourth-quarter outlook reflects accelerating revenue and earnings growth, driven by strong demand across our Data Center portfolio," said Jean Hu, AMD executive vice president, chief financial officer and treasurer.

Costs and cash

GAAP operating expenses were $4.38 billion, up 25% from a year earlier.

Cash, cash equivalents and short-term investments totaled $15.78 billion at the end of the quarter. Total debt was $7.08 billion, up from $3.23 billion in the second quarter, including a $4.75 billion senior notes offering completed in August.

Free cash flow was $554 million in the quarter, compared with $1.53 billion a year earlier.

The company said it agreed to acquire World Labs and Taalas, and expects both acquisitions to close by the end of 2026, subject to regulatory approvals and customary closing conditions.