AMD Beats Estimates as Data Center Sales Nearly Double, Guides Fourth Quarter to $17 Billion

Advanced Micro Devices reported record third-quarter results on Tuesday, powered by data center sales that nearly doubled from a year earlier.

Advanced Micro Devices, Inc. (NASDAQ: AMD) is a Santa Clara, California chipmaker. Its EPYC processors run servers, and its Instinct accelerators train and run AI models. It also sells Ryzen PC chips, gaming products and embedded processors.

Revenue cleared guidance and estimates

Revenue was $13.38 billion, up 45% from a year earlier. That result topped the high end of AMD's own guidance. AMD had guided third-quarter revenue to about $13.0 billion, plus or minus $300 million.

Adjusted earnings per share were $2.09, up 74% from $1.20 a year earlier. Adjusted earnings per share means profit excluding some one-off items. The Zacks Consensus Estimate was $1.94 a share.

Revenue also beat the Zacks estimate of $13.12 billion. By TickerGrove's calculation, the earnings beat was 7.7% and the revenue beat was 2.0%. Chief Executive Dr. Lisa Su called it a record quarter.

Data Center nearly doubled to a record

Data Center segment revenue was a record $8.55 billion, up 97% from a year earlier. That is up from $6.72 billion in the second quarter. The release cited strong demand for EPYC processors and the Instinct MI450 launch.

"We delivered a record quarter with revenue exceeding the high end of our guidance as Data Center segment sales nearly doubled year-over-year," said Dr. Lisa Su, AMD chair and CEO. She expects growth to accelerate in the fourth quarter.

Client grew, gaming fell, embedded rose

Client and Gaming segment revenue was $3.72 billion, down 8% from a year earlier. Client revenue was $2.95 billion, up 7%, driven by Ryzen mobile processor sales. The segment total fell because gaming dropped sharply.

Gaming revenue was $773 million, down 40% from a year earlier. The release blamed lower semi-custom and graphics revenue. Semi-custom chips are processors built mainly for game consoles.

Embedded segment revenue was $1.11 billion, up 29% from a year earlier. The release cited growth in aerospace and defense, automotive, communications and industrial markets. Embedded chips go into equipment rather than PCs.

Reported profit rose, margins held

On a reported basis, net income was $2.43 billion, up 95% from a year earlier. GAAP diluted earnings per share were $1.46, against $0.75 a year earlier. GAAP means the standard accounting rules.

GAAP gross margin was 54%, and the adjusted gross margin was 56%. Gross margin is the share of revenue left after production costs. AMD had guided the adjusted margin to about 56% for the quarter. Adjusted operating income was $3.92 billion, and adjusted net income was $3.47 billion.

Shares rose after hours on the report

Shares rose 4.86% in after-hours trading to $507.40 as of 4:31 p.m. ET on Tuesday, according to Nasdaq quote data. The official regular close was $483.90, up 3.65% on the day. That reaction figure is an after-hours snapshot, not a close.

AMD had closed Monday at $466.84, the prior close, amid a broad chip selloff. It recovered in Tuesday's regular session before the report. The after-hours move extends that recovery, on this one snapshot.

Cash flow lagged the profit lines

Operating cash flow from continuing operations was $1.2 billion. Free cash flow was $554 million, down from $1.53 billion a year earlier. Capital spending was $648 million in the quarter.

Fourth-quarter guidance points far higher

For the fourth quarter of 2026, AMD said it expects revenue of about $17 billion, plus or minus 3%. That outlook is announced, not reported. The release put midpoint growth at about 66% from a year earlier.

The midpoint also implies a sequential increase of about 27%. AMD expects an adjusted gross margin of about 55% for the quarter. That is one percentage point below the third quarter's adjusted margin.

"Our fourth-quarter outlook reflects accelerating revenue and earnings growth," said Jean Hu, AMD chief financial officer. She cited strong demand across the Data Center portfolio. The outlook follows a quarter when Data Center drove the record.

What remains unknown

What remains unknown includes whether the after-hours gain holds into Wednesday's regular session. After-hours snapshots can fade or reverse. The official test is the next regular close.

The segment split of the fourth-quarter outlook also remains unknown. The release does not say how much comes from Helios systems. Management's earnings call, set for 5:00 p.m. ET, had not begun at reporting time.

What to watch next

What to watch next is call commentary on the Helios and 'Venice' production scale-up. Su said both are central to the fourth-quarter acceleration. Detail there would firm up the outlook.

Watch fourth-quarter results against the $17 billion outlook and the 55% adjusted margin guide. Watch whether Data Center growth holds near this quarter's 97% pace. Full-year 2027 guidance is also still to come.