$13.4 Billion Revenue Sets New Record, AMD Enters "Data Center Time," Is Su stepping in to "save the market"?

Original author: Su Yang

Original editor: Xu Qingyang

Original source: Tencent Technology

On November 3 local time in the United States, AMD released its financial report for the third fiscal quarter ended September 26, 2026. Benefiting from continued growth in demand for artificial intelligence infrastructure, AMD's third-quarter results hit a new high, with both revenue and net profit exceeding Wall Street expectations.

The company's revenue for the quarter reached $13.377 billion, up 45% year-over-year and 16% quarter-over-quarter, exceeding Wall Street expectations of $10.9 billion. The data center business became the main driver of growth this quarter, with revenue reaching $8.546 billion, up 97% year-over-year, and its share of the company's total revenue rising to 64%.

Calculated under GAAP (Generally Accepted Accounting Principles), the company's net profit was $2.428 billion, up 95% year-over-year; non-GAAP net profit reached $3.471 billion, up 77% year-over-year. Non-GAAP diluted earnings per share were $2.09, higher than $1.20 in the same period last year and exceeding Wall Street expectations of $1.95.

Driven by results that exceeded Wall Street expectations, AMD shares rose as much as 8% in after-hours trading.

AMD expects fourth-quarter revenue to reach approximately $17 billion, which at the midpoint of the guidance would represent year-over-year growth of about 66% and quarter-over-quarter growth of about 27%.

AMD Chair and CEO Lisa Su said in the earnings statement that data center business revenue nearly doubled year-over-year, driving the company's third-quarter results to a record. Market demand for AMD Instinct series GPUs and AMD EPYC server processors remains strong. As the Helios rack-scale system and "Venice" architecture products gradually ramp up production, the company expects business growth to accelerate further in the fourth quarter.

Gross Margin and Operating Profit Improve in Tandem

AMD's GAAP gross profit for the quarter was $7.210 billion, with a gross margin of 54%, up 2 percentage points from the same period last year and flat compared with the previous quarter. On a non-GAAP basis, gross profit was $7.483 billion, with a gross margin of 56%, also up 2 percentage points from the same period last year.

Gross margins under both measures improved year-over-year, indicating that as revenue scale expanded, the profitability of the company's overall product mix also improved. The continued increase in the revenue share of the data center business is an important backdrop for observing this change.

In terms of operating expenses, GAAP operating expenses for the quarter were $4.378 billion, up 25% year-over-year; non-GAAP operating expenses were $3.560 billion, up 29% year-over-year. Among these, GAAP R&D expenses were $2.803 billion, higher than $2.139 billion in the same period last year.

The increase in R&D expenses reflects that AMD is still increasing investment in core technologies and products. As AI accelerators, high-performance server processors, and accompanying software products continue to iterate, the company needs to continuously invest R&D resources to maintain product competitiveness and meet growing demand in the data center market.

In terms of operating profit, GAAP operating profit for the quarter was $2.832 billion, up 123% year-over-year, with the operating margin rising to 21% from 14% in the same period last year. Non-GAAP operating profit was $3.923 billion, up 75% year-over-year, with an operating margin of 29%, higher than 24% in the same period last year.

GAAP operating profit grew faster than revenue, and the operating margin also rose by 7 percentage points. This indicates that revenue growth this quarter not only drove an expansion in profit scale but also enabled the company to achieve higher operating returns. Combined with gross margin performance, growth in the data center business and improvement in the overall profit structure provided support for AMD's profit growth this quarter.

Data Center Becomes the Core of Growth

The boom in artificial intelligence data center construction is affecting the traditional PC market. AI servers' growing demand for memory chips is squeezing the supply of chips needed for laptops and desktops and pushing up prices, and PC chipmakers such as AMD are also being affected.

At the same time, AMD is expanding its business in the AI infrastructure market by launching a new generation of CPUs and AI accelerator products, as well as the Helios rack-scale server solution.

AMD's business is mainly divided into three major segments: data center, client and gaming, and embedded. In the third quarter, the data center business continued to widen its lead, the client and gaming business was affected by a decline in gaming, and the embedded business continued its recovery trend.

The data center business generated revenue of $8.546 billion this quarter, up 97% year-over-year and 27% quarter-over-quarter; operating profit was $2.882 billion, up 168% year-over-year. The segment accounted for about 64% of the company's total revenue, up significantly from 47% in the same period last year, and has become AMD's largest source of revenue and profit.

Business growth mainly came from Instinct series AI accelerators and EPYC server processors. AMD disclosed in official materials that the Helios rack-scale solution, powered by AMD Instinct MI450 series GPUs and sixth-generation AMD EPYC processors, has been deployed in the AI infrastructure of customers including Anthropic, Meta, Microsoft, OpenAI, and Oracle Cloud Infrastructure.

As generative AI applications evolve toward agentic AI, model inference, task scheduling, and complex computing are placing higher demands on data center compute power. GPUs handle AI training and inference tasks, while server CPUs are responsible for system scheduling and general-purpose computing, and demand for both types of products is jointly driving growth in AMD's data center business.

The client and gaming businesses together generated revenue of $3.722 billion this quarter, down 8% year-over-year. Among these, client business revenue was $2.949 billion, up 7% year-over-year; gaming business revenue was $773 million, down 40% year-over-year.

The client business maintained growth, mainly benefiting from demand for laptops equipped with AMD Ryzen mobile processors and the company's product positioning in the commercial and high-end workstation markets. AMD also launched the Ryzen AI Max PRO 400 series processors for local AI computing and advanced related布局 for the Ryzen AI Halo platform.

The gaming business was affected by factors such as changes in demand for semi-custom chips for game consoles, with revenue down 40% year-over-year. Growth in the client business was unable to offset the decline in gaming, causing overall revenue for the client and gaming segment to fall below the same period last year.

The embedded business generated revenue of $1.109 billion this quarter, up 29% year-over-year and 14% quarter-over-quarter; operating profit reached $453 million, up 60% year-over-year.

As demand gradually improved in fields such as aerospace, defense, automotive, communications, and industrial applications, the embedded business continued to recover after previous inventory adjustments. AMD also disclosed this quarter the AMD Ross AI agent tool for embedded system development and began providing customers with Versal AI Core samples for long-duration space missions, continuing to expand its product layout in embedded and edge computing.

Increasing Investment to Secure Capacity

As of September 26, 2026, AMD held cash, cash equivalents, and short-term investments totaling $15.776 billion, total assets of $94.812 billion, and shareholders' equity of $68.389 billion. This quarter, cash flow generated from operating activities was $1.202 billion, and free cash flow was $554 million; cumulative free cash flow for the first three quarters of 2026 reached $4.678 billion.

AMD's capital expenditure (CapEx) this quarter was $648 million, higher than $258 million in the same period last year; cumulative capital expenditure for the first three quarters of 2026 reached $1.845 billion, compared with $752 million in the same period last year. As demand for AI chips and server processors grows, the company continues to increase capital investment to support business expansion and product delivery.

Advanced-process wafer foundry, high-bandwidth memory (HBM), and advanced packaging are important links in the supply chain for AI accelerators and server processors.

AMD said in its earnings materials that the company is continuing to deepen cooperation with key customers and supply chain partners to support product supply for Instinct series GPUs and EPYC processors. As the scale of the data center business expands, capacity assurance and supply chain coordination will affect the delivery pace of new products.

In addition to expanding its existing business layout, AMD is also supplementing its technical capabilities through acquisitions. The company disclosed this quarter that it has reached an agreement to acquire World Labs, further expanding into model research and AI infrastructure; it also reached an acquisition agreement with Taalas to bring in customized inference chip technology and expand its technical capabilities in the AI inference field. Both transactions are currently at the stage of agreement disclosure and have not yet been completed.

Q4 Revenue Expected to Grow 66% Year-over-Year

AMD expects fourth-quarter revenue for fiscal 2026 to be approximately $17 billion, plus or minus 3%. At the midpoint of the guidance, fourth-quarter revenue would grow about 66% year-over-year and about 27% quarter-over-quarter.

This figure is significantly higher than the market's previous average expectation of about $16.2 billion to $16.3 billion, reflecting the company's expectation that the data center business will continue to maintain strong growth momentum.

In terms of gross margin, AMD expects fourth-quarter non-GAAP gross margin to be approximately 55%, a slight decrease of 1 percentage point from 56% in the third quarter. Actual gross margin performance will still be affected by factors such as product shipment mix, business portfolio, and supply chain costs.

In this regard, The Wall Street Journal noted in its commentary that the short-term slight narrowing of gross margin mainly stems from the high supply chain costs of the new-generation rack-scale products in the early stage of mass production, but this is consistent with the normal profitability curve during the large-scale delivery phase of hardware products and has not shaken market confidence in its profitability.

CNBC noted that AMD's strong fourth-quarter guidance injected a shot in the arm into capital markets that have recently fluctuated on concerns about an "AI infrastructure investment bubble." The report analyzed that although AMD still lags Nvidia in the AI accelerator field, it is continuing to expand market share through its Helios rack-scale design and technical barriers in server CPUs (EPYC series), and has successfully positioned itself as an indispensable "second source" in the AI compute supply chain of large technology companies.

Looking ahead to the fourth quarter, market attention will focus on the delivery progress and capacity coordination of the Helios rack-scale system, Instinct MI450 series GPUs, and the new generation of EPYC processors.

Whether AMD can steadily convert growing AI compute demand into stable product shipments and revenue while facing upstream constraints in advanced process and memory chip capacity will be the key to determining its performance trend in the coming quarters.