Advanced Micro Devices forecasts US$17B sales as data-centre revenue jumps 97%
AMD's quarterly revenue reaches US$13.4 billion, while its fourth-quarter sales midpoint exceeds consensus and its margin forecast eases.
Julian Okafor
Data-centre chip sales nearly doubled in the September quarter as AI demand lifted the next revenue forecast above Wall Street's expectations. Advanced Micro Devices, Inc. NASDAQAMD, the California designer of server, PC and graphics processors, reported on Nov. 3 that data-centre revenue reached US$8.5 billion, up 97 per cent year over year.
Total revenue for the third quarter of 2026 rose 45 per cent to US$13.4 billion. Adjusted earnings reached US$2.09 a share, compared with US$1.20 a year earlier, as server processors and AI accelerators generated growth that outweighed weaker gaming sales.
AMD's fourth-quarter forecast calls for about US$17 billion of revenue, plus or minus 3 per cent. That midpoint exceeds the US$16.29 billion consensus in tastylive's Nov. 2 earnings preview, although the company expects its adjusted gross margin to ease.
The available Google Finance quote showed a Nasdaq close of US$466.84 at 4:00 p.m. EST on Nov. 2 for NASDAQAMD. That predates the earnings announcement and does not establish the market's reaction to the results.
Data-Centre Growth Offsets Weaker Gaming Sales
AMD attributed the third-quarter data-centre increase to demand for EPYC server processors and the launch of Instinct MI450 Series graphics processors. The segment combines CPUs and GPUs, so its 97 per cent growth rate does not measure AI accelerator revenue alone.
The data-centre business also produced US$2.882 billion of operating income in the quarter ended Sept. 26, according to AMD's financial tables. That compares with US$1.074 billion a year earlier, giving the revenue expansion a corresponding increase in segment profit.
"Demand for our Instinct and EPYC products continued to strengthen, and we expect growth to accelerate further in the fourth quarter as we scale Helios and ‘Venice’ production," AMD chair and chief executive Lisa Su said in the Nov. 3 release.
AMD's client and gaming segment moved in the opposite direction during the third quarter of 2026, with revenue down 8 per cent to US$3.7 billion. Within that total, client revenue rose 7 per cent, while gaming revenue fell 40 per cent because of lower semi-custom and graphics sales.
Embedded revenue rose 29 per cent to US$1.1 billion in the third quarter of 2026. AMD identified aerospace and defence, automotive, communications and industrial markets as the sources of that growth, separating it from the data-centre expansion.
The Revenue Forecast Rises As The Margin Outlook Eases
The fourth-quarter midpoint implies approximately 66 per cent annual revenue growth and 27 per cent growth from the September quarter, AMD said on Nov. 3. Its adjusted gross-margin forecast is about 55 per cent, compared with 56 per cent in the third quarter.
The reported results also cleared the expectations in tastylive's Nov. 2 preview, which put third-quarter consensus revenue at US$13.09 billion and adjusted earnings at US$1.95 a share. Those comparisons use adjusted earnings; AMD's reported diluted profit was US$1.46 a share.
Mike Butler, tastylive's director of market intelligence, warned in that preview that high-bandwidth memory, advanced packaging and the shift toward rack-scale systems could pressure margins. His analysis preceded the results; AMD's Nov. 3 forecast projects lower adjusted gross margin without quantifying those individual cost effects.
NVIDIA Corporation NASDAQNVDA, the competing GPU and computing-platform supplier, reported quarterly data-centre revenue of US$89 billion on Aug. 26. Its segment sales rose 117 per cent year over year, providing a separate measure of infrastructure demand across a different reporting period.
Inventory Growth Absorbs Operating Cash
AMD's cash flow shows the spending behind its expansion. Continuing operations generated US$1.202 billion of operating cash in the quarter ended Sept. 26, compared with US$1.788 billion a year earlier, despite the increase in profit.
Inventory absorbed US$2.995 billion of cash during the September quarter, while purchases of property and equipment used another US$648 million. At Sept. 26, cash and equivalents stood at US$7.404 billion, alongside US$8.372 billion of short-term investments and US$7.079 billion of long-term debt.
AMD's May 13, 2025 collaboration announcement outlined up to US$10 billion of joint AI infrastructure investment over five years. That prospective spending featured in Mugglehead's Nov. 1 coverage of Saudi AI investment; the latest quarterly release does not allocate data-centre revenue to that agreement.
Read more: AMD's Saudi AI infrastructure agreement sits alongside new investment
The next scheduled test is AMD's results call at 5:00 p.m. EST on Nov. 3. Management's discussion offers the next opportunity to explain the production ramp behind its fourth-quarter forecast and the lower gross-margin outlook.
