AMD CEO Lisa Su: "We are a data center first company"

AMD CEO Lisa Su declared that AMD is now a "data center first" company, a shift underscored by third-quarter results in which data center revenue nearly doubled to $8.5 billion, up 97% year over year, and represented 64% of total revenue, App Economy Insights reported. Q3 revenue rose 45% year over year to $13.4 billion, a $290 million beat, while adjusted EPS surged 74% to $2.09, a $0.15 beat, according to App Economy Insights. Barchart.com reported Q3 revenue of $13.4 billion, up 45% year over year, with data center sales almost doubling to $8.5 billion and data center operating income surging 168% to $2.9 billion.

Gaming revenue fell 40% to $773 million amid weaker console and graphics sales, App Economy Insights reported. Client revenue grew 7% to $2.9 billion, slowing sharply as rising memory prices pressured PC demand. Barchart.com said client and gaming revenue fell 8% to $3.7 billion in Q3.

Su expects more than 80% revenue growth in 2027, with data center representing over 80% of the business, App Economy Insights reported. Server CPU revenue should double, while data center AI revenue is expected to grow even faster. Barchart.com said Su raised the CPU revenue estimate on the Nov. 3 earnings call and expects sales to double in 2027. Data center AI revenue, including Instinct AI chips, should grow even faster than AMD projected 90 days earlier.

AMD guided Q4 revenue to $17 billion at the midpoint, roughly $0.8 billion above consensus, implying 66% year-over-year growth and a 27% sequential increase, App Economy Insights reported. Data center alone should grow roughly 50% quarter over quarter, with AI accelerator revenue surpassing server CPU revenue for the first time. Yahoo Finance reported the Q4 forecast of approximately $17 billion, plus or minus 3%, topped analyst expectations of $16.23 billion.

Q4 gross margin is expected to ease from 56% to 55% as AI accelerators make up a larger share of the mix, App Economy Insights reported. Free cash flow fell to $554 million from $1.6 billion in Q2 as inventory increased by $3 billion to support the infrastructure ramp. Barchart.com reported inventory rose by $3 billion to $11.5 billion and free cash flow of $554 million in Q3 compared to $1.53 billion last year.

Su said demand is higher than supply and that AMD has secured wafers, packaging, memory, and other parts, Barchart.com reported. Addressing AI infrastructure bottleneck fears, Su said AMD has good visibility into 2027 and is working hand in hand with customers on land, power, shells, and data center infrastructure, Yahoo Finance reported. She named Meta, OpenAI, and Anthropic as anchor customers and said AMD started shipping MI455X chips in volume to tech giants including Anthropic, Meta Platforms, Microsoft, OpenAI, and Oracle, Barchart.com reported.

Shares initially rallied after earnings, then plunged more than 17% in Thursday’s broader AI-stock rout, App Economy Insights reported. Barchart.com said AMD stock is down almost 38% from all-time highs and valued at a market cap of over $700 billion, with 37 of 47 analysts recommending "Strong Buy" and an average price target of $660 above the current price of $405.