Advanced Micro Devices (AMD) projected fourth-quarter revenue above Wall Street expectations on Tuesday, as rising investments in data center infrastructure and accelerating demand for artificial intelligence (AI) chips continue to buoy the semiconductor maker’s prospects.
AMD forecasted Q4 revenue of approximately $9.6 billion, give or take $300 million, surpassing the $9.15 billion analyst consensus compiled by LSEG. The upbeat projection comes as major players—including OpenAI and the U.S. Department of Energy—ramp up AI hardware spending, making significant commitments to AMD’s advanced processors.
Still, investor sentiment remains cautious amid concerns that the recent AI boom may not generate sufficient returns to justify hefty capital outlays and record-high valuations.
The company’s shares dropped around 3% on Tuesday, despite having more than doubled in value so far this year. That performance has outpaced industry giant Nvidia, which recently crossed a $5 trillion market capitalization.
AMD reported third-quarter sales of $9.25 billion, exceeding the $8.74 billion consensus estimate. The company’s results were closely watched as unease grows over a potential AI bubble rippling through markets.
Growth was especially strong in AMD’s all-important data center division—home to the firm’s AI chips. Segment revenue jumped 22% to $4.3 billion, comfortably topping analyst forecasts. During an earnings call, executives announced that AMD has obtained licenses to supply modified MI300 AI chips in China, although sales have yet to commence. Rival Nvidia also holds similar licenses for restricted AI chip models in China.
Persistent heavy AI investment by technology leaders has continued to drive up chip demand, directly benefiting chipmakers such as AMD. Microsoft, a key AMD client, recently reported a record $35 billion in first-quarter capital expenditures, with roughly half directed toward chip purchases.
Demand for server processors—where AMD has been clawing share from Intel—has also accelerated alongside the AI infrastructure buildout. Analysts expect these trends to further boost AMD’s data center CPU sales.
Consumer market momentum returned as well: client segment revenue, which includes PCs, surged 46% to $2.8 billion in Q3. The uptick was supported by consumers shifting to AI-enabled PCs and an ongoing Windows upgrade cycle. Gartner’s preliminary data highlighted an 8% global increase in PC shipments last quarter.
Looking ahead, AMD guided for an adjusted gross margin of 54% for the fourth quarter, slightly below the 54.5% expectation. The third quarter saw a margin of 54%, a notch above forecasts.
To meet escalating demand, AMD is ramping up production of its latest chips, elevating manufacturing to full AI system deployment: a strategy that mirrors Nvidia’s moves, albeit at significant expense.
On an adjusted basis, AMD reported earnings of $1.20 per share in Q3, beating analyst estimates of $1.16.
Last month, AMD revealed a multi-year agreement to supply AI chips to OpenAI, a deal which could deliver tens of billions of dollars in annual sales and grant OpenAI the option to acquire up to 10% of AMD’s output. The partnership covers the installation of hundreds of thousands of AMD GPUs—enough, the company estimates, to power about 5 million households or exceed the output of the Hoover Dam threefold.
The announcement has buoyed optimism around AMD’s chances in the race for AI chip supremacy. Nevertheless, industry analysts suggest Nvidia’s commanding lead in the GPU market remains intact, even as AMD aggressively carves out a larger share.
