Overview

AMD reported third-quarter earnings on Tuesday that exceeded analyst expectations. However, the chipmaker’s forecast for the next quarter fell short, leading to a 4% drop in the stock price during extended trading.

Third-Quarter Performance

Here’s how AMD performed in the third quarter, compared to LSEG consensus estimates:

• EPS: $0.70 (adjusted) vs. expected $0.68 per share
• Revenue: $5.8 billion vs. expected $5.7 billion

Fourth-Quarter Forecast

AMD expects sales of approximately $6.1 billion for the fourth quarter, falling short of analysts’ expectations of $6.37 billion in revenue.

Financial Highlights

In the third quarter, AMD’s net income rose to $299 million ($0.18 per share) compared to $66 million ($0.04 per share) in the same period last year. Revenue increased by 4% to $5.8 billion from $5.6 billion a year ago.

Segment Performance

• Client Group: Revenue increased by 42% to $1.5 billion, driven by PC chip sales.
• Data Center: Sales remained flat at $1.6 billion, with growth in server CPUs offsetting declines in other areas. AMD expects strong growth in the data center business in the fourth quarter.
• Embedded: Revenue declined by 5% to $1.2 billion, attributed to a weak communications market.
• Gaming: Sales declined by 8% to $1.5 billion due to lower sales of “semi-custom” chips used in consoles.

Rival Performance

Intel, AMD’s chief rival, also reported better-than-expected third-quarter earnings. However, Intel showed a decline in annual sales.

AI Business

AMD is a leader in high-end graphics processing units (GPUs) used for training and deploying generative AI models. Although the market is dominated by Nvidia, AMD’s forthcoming MI300A and MI300X AI chips are on track for volume production in the current quarter. AMD CEO Lisa Su highlighted the company’s strong growth trajectory in the data center business, driven by the EPYC CPU portfolio and Instinct MI300 accelerator shipments.