Advanced Micro Devices reported record quarterly revenue of $13.4 billion for the third quarter of 2026, a 45% increase year-over-year. CEO Lisa Su characterized the period as the “largest and most profitable” quarter in the company’s history, driven primarily by a surge in demand for artificial intelligence and server infrastructure.
The company’s data center segment reached a record $8.5 billion in revenue, representing a 97% increase compared to the same period last year. This growth is being propelled by the expansion of its data center offerings. Customers for the company’s technology include OpenAI.
The AI Revenue Crossover
A central component of AMD’s current trajectory is the projected “AI crossover” event. According to company projections shared during the Q3 2026 earnings call, revenue from AI chips is expected to surpass server CPU revenue for the first time in the fourth quarter of 2026.
To prepare for this shift and the subsequent hardware ramps, AMD significantly increased its inventory levels. Inventory grew by $3 billion sequentially to reach $11.5 billion. While this inventory build is intended to support aggressive growth targets, it contributed to a decline in free cash flow, which stood at $554 million for the quarter.
Strategic Acquisitions and Financial Adjustments
AMD also finalized an agreement to acquire AI startup World Labs for approximately $8.2 billion in an all-stock transaction. As part of the acquisition, AI pioneer Fei-Fei Li is set to join AMD as executive vice president and chief scientist once the deal closes.
The quarter’s GAAP financial results were impacted by a $1.1 billion non-cash charge. This charge is related to warrants issued to specific customers, including OpenAI. Despite this one-time impact, AMD remains focused on a long-term expansion strategy, projecting revenue growth of more than 80% for the full year 2027.
Looking ahead, AMD provided revenue guidance for the fourth quarter of 2026 at approximately $17 billion, plus or minus 3%. This outlook suggests a continued acceleration of the data center business as the company transitions into a specialized AI infrastructure provider.
According to transcript data from the earnings call, the company expects the momentum in its data center segment to offset softer trends in other divisions, as enterprise and cloud providers prioritize the procurement of high-performance compute clusters.