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AMD Q3 Earnings Beat Estimates, Strong Data Center Aids Revenue Growth
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Key Takeaways
AMD's Q3 earnings surged 74.2% to $2.09 per share, while revenues climbed 44.7% to $13.38 billion.
Data Center revenues jumped 96.9% to $8.55 billion, driven by EPYC demand.
AMD projects Q4 revenues of $17 billion, with Data Center sales expected to grow 50% sequentially.
Advanced Micro Devices (AMD - Free Report) reported third-quarter 2026 non-GAAP earnings of $2.09 per share, up 74.2% year over year. The figure beat the Zacks Consensus Estimate by 7.73%.
Revenues increased 44.7% year over year to $13.38 billion and surpassed the consensus mark by 1.97%. The top line benefited from record EPYC processor and Instinct GPU sales, alongside strengthening Embedded demand.
Data Center revenues surged 96.9% year over year to $8.55 billion, contributing approximately 64% of total revenues.
Advanced Micro Devices, Inc. Price, Consensus and EPS Surprise
Data Center revenues were driven by expanding deployments of EPYC processors across cloud and enterprise workloads and initial shipments of Instinct MI450 Series GPUs.
Server sales more than doubled year over year as hyperscalers expanded EPYC capacity for cloud services and agentic AI workloads. AMD began revenue shipments of sixth-generation EPYC Venice processors, while MI455X GPUs and Helios rack-scale systems entered volume production. Anthropic, Meta, Microsoft, OpenAI and Oracle initiated Helios deployments during the quarter.
AMD Sees Mixed Client and Gaming Trends
Client and Gaming segment revenues declined 8.1% year over year to $3.72 billion. Client revenues increased 7% to $2.9 billion, supported by Ryzen mobile processor demand and broader commercial adoption. However, higher memory and component costs weighed on PC demand late in the quarter.
Gaming revenues plunged 40% year over year to $773 million, reflecting lower semi-custom sales and graphics demand. Meanwhile, Embedded segment revenues rose 29.4% to $1.11 billion, supported by aerospace and defense, automotive, communications and industrial customers. AMD expects Embedded design wins to exceed $18 billion in 2026.
AMD Accelerates AI Platform Expansion
AMD expanded its AI infrastructure portfolio through the launch of ROCm 10, which introduces improved cluster scalability and AI-assisted performance optimization. The company also introduced Helion, a reference architecture for rack-scale systems combining EPYC processors and Instinct GPUs.
AMD announced agreements to acquire Taalas and World Labs to strengthen its inference technology and AI model research capabilities. Both transactions are expected to close by year-end. AMD also highlighted growing customer engagement around its next-generation MI500 accelerators, targeting larger AI infrastructure deployments.
AMD Expands Margins as Operating Income Rises
Non-GAAP gross profit increased 49.9% year over year to $7.48 billion. Gross margin expanded 190 basis points to 56%, benefiting from a richer product mix.
Non-GAAP operating expenses increased 29.3% to $3.56 billion as AMD expanded investments in data center silicon, systems and software.
Operating income surged 75.3% to $3.92 billion, while operating margin improved to 29% from 24%.
Data Center operating income jumped 168.3% to $2.88 billion, with operating margin expanding to 34% from 25%. Client and Gaming operating income fell 33.9% to $573 million. Embedded operating income increased 60.1% to $453 million, reflecting stronger revenues and operating leverage.
Cash, cash equivalents and short-term investments totaled $15.78 billion, up 20.3% sequentially. Total debt increased to $7.08 billion from $3.23 billion, including a $4.75 billion senior notes offering completed in August.
AMD generated $1.2 billion in operating cash flow from continuing operations and $554 million in free cash flow. Inventory increased approximately $3 billion sequentially to $11.46 billion as the company secured components and capacity to support expanding Data Center demand.
AMD Issues Strong Q4 Outlook
For the fourth quarter of 2026, AMD expects revenues of approximately $17 billion, plus or minus 3%. The midpoint implies growth of roughly 66% year over year and 27% sequentially. Data Center revenues are projected to increase approximately 50% sequentially, while Client and Gaming revenues are expected to decline more than 20%.
Non-GAAP gross margin is projected at approximately 55%, with operating expenses of roughly $3.75 billion.
AMD expects 2027 revenues to grow more than 80%, supported by server revenue doubling and faster Data Center AI growth. Data Center is expected to contribute more than 80% of total revenues in 2027, with operating expenses growing at less than half the revenue growth rate.
Forgent Power, Telos and NVIDIA are expected to report their quarterly results on Nov. 12, 9 and 17, respectively. Forgent Power shares have dropped 23.3% year to date (YTD). Telos shares have inched up 2.8% YTD, while NVIDIA shares have climbed 9% YTD.
View the Zacks #1 Rank List
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AMD Q3 Earnings Beat Estimates, Strong Data Center Aids Revenue Growth
Key Takeaways
Advanced Micro Devices (AMD - Free Report) reported third-quarter 2026 non-GAAP earnings of $2.09 per share, up 74.2% year over year. The figure beat the Zacks Consensus Estimate by 7.73%.
Revenues increased 44.7% year over year to $13.38 billion and surpassed the consensus mark by 1.97%. The top line benefited from record EPYC processor and Instinct GPU sales, alongside strengthening Embedded demand.
Data Center revenues surged 96.9% year over year to $8.55 billion, contributing approximately 64% of total revenues.
Advanced Micro Devices, Inc. Price, Consensus and EPS Surprise
Advanced Micro Devices, Inc. price-consensus-eps-surprise-chart | Advanced Micro Devices, Inc. Quote
AMD Data Center Sales Surge on AI Demand
Data Center revenues were driven by expanding deployments of EPYC processors across cloud and enterprise workloads and initial shipments of Instinct MI450 Series GPUs.
Server sales more than doubled year over year as hyperscalers expanded EPYC capacity for cloud services and agentic AI workloads. AMD began revenue shipments of sixth-generation EPYC Venice processors, while MI455X GPUs and Helios rack-scale systems entered volume production. Anthropic, Meta, Microsoft, OpenAI and Oracle initiated Helios deployments during the quarter.
AMD Sees Mixed Client and Gaming Trends
Client and Gaming segment revenues declined 8.1% year over year to $3.72 billion. Client revenues increased 7% to $2.9 billion, supported by Ryzen mobile processor demand and broader commercial adoption. However, higher memory and component costs weighed on PC demand late in the quarter.
Gaming revenues plunged 40% year over year to $773 million, reflecting lower semi-custom sales and graphics demand. Meanwhile, Embedded segment revenues rose 29.4% to $1.11 billion, supported by aerospace and defense, automotive, communications and industrial customers. AMD expects Embedded design wins to exceed $18 billion in 2026.
AMD Accelerates AI Platform Expansion
AMD expanded its AI infrastructure portfolio through the launch of ROCm 10, which introduces improved cluster scalability and AI-assisted performance optimization. The company also introduced Helion, a reference architecture for rack-scale systems combining EPYC processors and Instinct GPUs.
AMD announced agreements to acquire Taalas and World Labs to strengthen its inference technology and AI model research capabilities. Both transactions are expected to close by year-end. AMD also highlighted growing customer engagement around its next-generation MI500 accelerators, targeting larger AI infrastructure deployments.
AMD Expands Margins as Operating Income Rises
Non-GAAP gross profit increased 49.9% year over year to $7.48 billion. Gross margin expanded 190 basis points to 56%, benefiting from a richer product mix.
Non-GAAP operating expenses increased 29.3% to $3.56 billion as AMD expanded investments in data center silicon, systems and software.
Operating income surged 75.3% to $3.92 billion, while operating margin improved to 29% from 24%.
Data Center operating income jumped 168.3% to $2.88 billion, with operating margin expanding to 34% from 25%. Client and Gaming operating income fell 33.9% to $573 million. Embedded operating income increased 60.1% to $453 million, reflecting stronger revenues and operating leverage.
AMD Strengthens Liquidity Amid Inventory Investments
Cash, cash equivalents and short-term investments totaled $15.78 billion, up 20.3% sequentially. Total debt increased to $7.08 billion from $3.23 billion, including a $4.75 billion senior notes offering completed in August.
AMD generated $1.2 billion in operating cash flow from continuing operations and $554 million in free cash flow. Inventory increased approximately $3 billion sequentially to $11.46 billion as the company secured components and capacity to support expanding Data Center demand.
AMD Issues Strong Q4 Outlook
For the fourth quarter of 2026, AMD expects revenues of approximately $17 billion, plus or minus 3%. The midpoint implies growth of roughly 66% year over year and 27% sequentially. Data Center revenues are projected to increase approximately 50% sequentially, while Client and Gaming revenues are expected to decline more than 20%.
Non-GAAP gross margin is projected at approximately 55%, with operating expenses of roughly $3.75 billion.
AMD expects 2027 revenues to grow more than 80%, supported by server revenue doubling and faster Data Center AI growth. Data Center is expected to contribute more than 80% of total revenues in 2027, with operating expenses growing at less than half the revenue growth rate.
Zacks Rank & Other Stocks to Consider
AMD currently has a Zacks Rank #3 (Hold).
Forgent Power Solutions (FPS - Free Report) , Telos (TLS - Free Report) and NVIDIA (NVDA - Free Report) are some better-ranked stocks in the broader Zacks Computer and Technology sector. While Forgent Power and Telos sport a Zacks Rank #1 (Strong Buy) each at present, NVIDIA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Forgent Power, Telos and NVIDIA are expected to report their quarterly results on Nov. 12, 9 and 17, respectively. Forgent Power shares have dropped 23.3% year to date (YTD). Telos shares have inched up 2.8% YTD, while NVIDIA shares have climbed 9% YTD.