Key Notes
- AMD beat estimates with record quarterly revenue of $13.38 billion and adjusted earnings of $2.09 per share.
- Data center revenue rose 97% to $8.55 billion, accounting for nearly two-thirds of total revenue.
- AMD expects about $17 billion in fourth-quarter sales and an adjusted gross margin of about 55%.
Advanced Micro Devices (Nasdaq: AMD) reported record third-quarter revenue and forecast about $17 billion in fourth-quarter sales as its data center business expanded. Revenue rose 45% to $13.38 billion, ahead of the $13.08 billion estimate. Adjusted earnings rose 74% to $2.09 a share, above the $1.97 estimate. Earnings filing
Adjusted operating income rose 75% to $3.92 billion, beating the $3.68 billion estimate. Adjusted operating margin increased to 29% from 24% a year earlier. On a GAAP basis, AMD earned $1.46 per diluted share, up from 75 cents. Revenue also exceeded the upper end of the $12.7 billion to $13.3 billion range AMD gave in August. Prior outlook
Data Center Revenue Nearly Doubles
Data center revenue climbed 97% to $8.55 billion and accounted for about 64% of total sales. AMD attributed the increase to demand for its EPYC server processors and the launch of Instinct MI450 graphics processors. Segment operating income rose to $2.88 billion from $1.07 billion a year earlier.
Elsewhere, client revenue rose 7% to $2.95 billion, helped by sales of Ryzen mobile processors. Gaming revenue fell 40% to $773 million as sales of semi-custom chips and graphics products declined. Embedded revenue rose 29% to $1.11 billion, with growth across markets including aerospace and defense, automotive, communications and industrial equipment.
AMD Projects About $17 Billion in Fourth-Quarter Sales
AMD forecast fourth-quarter revenue of about $17 billion, plus or minus 3%. The midpoint implies growth of about 66% from a year earlier and 27% from the third quarter. It expects adjusted gross margin of about 55%, compared with 56% in the third quarter. Chief Executive Lisa Su said growth should accelerate as AMD increases production of its Helios server systems and Venice EPYC processors.
Helios combines AMD processors and graphics chips in a system that customers can deploy as a full rack. AMD said initial systems were running workloads at Anthropic, Meta, Microsoft, OpenAI and Oracle Cloud Infrastructure. We previously reported on demand for AMD processors in Meta’s AI systems.
Research Spending Rises as Free Cash Flow Falls
Research and development expense reached $2.80 billion, above the $2.72 billion estimate and up from $2.14 billion a year earlier. Capital expenditures of $648 million were close to the $647 million estimate. Free cash flow fell to $554 million from $1.53 billion a year earlier, as operating cash flow from continuing operations declined and capital spending increased.
