Advanced Micro Devices (AMD) reported fiscal third-quarter results that exceeded Wall Street expectations. Revenue reached $9.25 billion, compared with the $8.74 billion expected, a 36% increase from the previous year. Adjusted earnings per share were $1.20, above the $1.16 consensus. Net income rose to $1.24 billion, or 75 cents per share, up from $771 million, or 47 cents per share, a year earlier.

Margin Guidance Meets Market Estimates

For the fourth quarter, AMD expects revenue of about $9.6 billion, above the $9.15 billion consensus. Adjusted gross margin is forecast at 54.5%, in line with expectations. The guidance does not include revenue from shipments of Instinct MI308 chips to China, though the company indicated some revenue from these chips could occur. CEO Lisa Su said, “We have received some licenses for MI308, so we’re appreciative of the administration supporting some licenses for MI308. We’re still working with our customers on the demand environment and sort of what the overall opportunity is.”

Strategic AI Partnerships Boost Future Prospects

AMD announced a deal with OpenAI last month that may include a 10% stake in the chipmaker. OpenAI plans to use six gigawatts of AMD’s Instinct GPUs over several years, starting with one gigawatt in the second half of next year. Su said, “We expect this partnership will significantly accelerate our data center AI business with the potential to generate well over $100 million in revenue over the next few years.” Oracle also plans to deploy 50,000 AMD Instinct MI450 AI chips in its cloud next year.

Data Center and Gaming Segments Drive Revenue Growth

AMD’s data center segment, which includes CPUs and AI GPUs, generated $4.34 billion in Q3 revenue, up 22% from a year earlier, exceeding the $4.13 billion expected. Client revenue reached $2.75 billion, a 46% increase, above the $2.61 billion consensus. Gaming revenue jumped 181% to $1.3 billion, surpassing the $1.05 billion forecast. Su attributed gaming growth to Microsoft and Sony increasing production of Xbox and PlayStation consoles ahead of the holiday season.

Shareholder Moves Highlight Market Sentiment

AMD shares have risen 107% so far this year, compared with a 21% gain for the Nasdaq. On Tuesday, Amazon disclosed it sold all 822,234 of its AMD shares as of September 30, after building the position earlier in the first quarter.

PHOTO: UNSPLASH

This article was created with AI assistance.