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Highlights
- AMD's Q3 revenue hit record highs, driven by AI data center chips.
- Gaming revenue declined, impacting overall results.
- Q4 guidance slightly below Wall Street estimates, affecting shares.
Advanced Micro Devices Inc. (NASDAQ:AMD) delivered strong financial performance in its third quarter, with both revenue and earnings exceeding Wall Street projections. A significant factor behind this success was heightened demand for AI data center chips, leading to record Q3 revenue of $6.82 billion, an 18% increase from the previous year. This impressive figure also surpassed analysts’ expectations of $6.71 billion, highlighting AMD's substantial growth in key segments.
The Data Center division was a standout performer, posting a record-breaking $3.5 billion in revenue—representing a remarkable 122% jump from the same period in 2023. This growth stemmed primarily from increased shipments of AMD Instinct GPU products and solid sales of EPYC CPUs, both crucial for data-intensive AI and computing applications. However, the Gaming division saw a notable revenue decline of 69% year-over-year to $462 million, with AMD attributing this drop to a decrease in semi-custom chip sales used in gaming consoles.
Earnings per share (EPS) for AMD reached $0.92, slightly above analysts’ forecast of $0.91 and up 31% from the previous year. This growth in EPS highlights the efficiency and profitability AMD has managed to achieve despite the challenges in the gaming segment. AMD CEO Lisa Su expressed optimism, stating, “We delivered strong third quarter financial results with record revenue led by higher sales of EPYC and Instinct data center products and robust demand for our Ryzen PC processors.”
Looking ahead, AMD’s Q4 guidance suggested revenue between $7.2 billion and $7.8 billion, implying potential growth of around 22% from the prior year. However, the lower end of this range, which sits at $7.2 billion, fell slightly below Wall Street’s consensus of $7.54 billion, causing some concern in the market. As a result, AMD shares dropped by around 6%, settling near $156 following the earnings report.
This mixed response to AMD’s forecast for the coming quarter reflects cautious sentiment among investors, despite the company’s impressive Q3 results. Nonetheless, AMD remains focused on substantial opportunities across its data center, client, and embedded businesses, aiming to leverage the growing demand for AI and computing solutions.
