According to CNBC, AMD reported fiscal third-quarter revenue of $7.4 billion, a 36% year-over-year increase that beat Wall Street expectations. Net income jumped to $1.24 billion, or 75 cents per share, up from $771 million a year earlier. For the crucial fourth quarter, AMD expects about $9.6 billion in revenue, well above consensus estimates of $9.15 billion. However, the company’s adjusted gross margin guidance of 54.5% only met analyst expectations rather than exceeding them. The stock slipped in extended trading despite the strong top-line performance. AMD also confirmed its guidance doesn’t include revenue from shipments of its Instinct MI308 AI chips to China.
Sponsored content — provided for informational and promotional purposes.
AI drives the bus
Here’s the thing about AMD right now: everything comes back to artificial intelligence. The company’s data center business, which includes both traditional CPUs and those all-important AI GPUs, generated $4.34 billion in revenue, up 22% and beating StreetAccount’s $4.13 billion consensus. But the real story is how AMD is positioning itself as the credible alternative to Nvidia in the AI processor race. They’re not just talking about it either – that massive OpenAI deal from last month could see the AI giant take a 10% stake in AMD while deploying 6 gigawatts of AMD’s Instinct GPUs over multiple years.
The margin question
So why did the stock drop on what looks like a solid beat? Basically, investors wanted to see margin expansion alongside the revenue growth. When you’re guiding for 25% revenue growth in Q4 but your margins are just meeting expectations, it suggests you might be competing on price rather than commanding premium pricing. That’s crucial in the AI chip space where Nvidia has been able to maintain incredible margins. AMD’s gaming revenue actually surged 181% to $1.30 billion, which is fantastic, but the market is laser-focused on whether they can capture AI margins that justify their 107% stock gain this year.
Cloud complications
Now for the interesting subplot: Amazon sold all of its 822,234 AMD shares as of September 30, according to an SEC filing. That’s worth noting because Amazon is both a major cloud competitor and a key customer for AMD. Does this mean anything strategically? Probably not – big funds rebalance positions all the time. But it’s happening while AMD is expanding partnerships with other cloud providers like Oracle to help customers achieve AI scale. The timing just makes you wonder if there’s more to the story.
The bigger picture
Look, AMD is executing well in a market that’s completely obsessed with AI infrastructure. Their client revenue jumped 46% to $2.75 billion, gaming revenue exploded, and data center growth remains strong. But the market’s reaction tells you everything about current expectations. When you’re up 107% year-to-date, you need to beat on every metric, not just revenue. The China exclusion from guidance continues to be a wild card, and investors clearly wanted to see that margin guidance come in above 54.5%. Still, with that OpenAI commitment and strong enterprise demand, AMD remains one of the few companies actually competing in the high-stakes AI chip game.
