$13.4 billion in revenue sets a record, AMD enters "data center time," is Su Ma stepping in to "rescue the market"?

AMD CEO Lisa Su. Image generated by AI

Written by｜Su Yang

Editor｜Xu Qingyang

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

The company's operating revenue for the quarter reached $13.377 billion, a year-on-year increase of 45% and a quarter-on-quarter increase of 16%, surpassing Wall Street's expectation of $10.9 billion. The data center business became the main driver of growth this quarter, with revenue reaching $8.546 billion, a year-on-year increase of 97%, accounting for 64% of the company's total revenue.

According to GAAP (Generally Accepted Accounting Principles), the company's net profit was $2.428 billion, a year-on-year increase of 95%; non-GAAP net profit reached $3.471 billion, a year-on-year increase of 77%. The non-GAAP diluted earnings per share were $2.09, up from $1.20 in the same period last year, exceeding Wall Street's expectation of $1.95.

Driven by performance exceeding Wall Street expectations, AMD's stock surged by 8% in after-hours trading.

AMD expects fourth-quarter revenue to reach approximately $17 billion, representing a year-on-year increase of about 66% and a quarter-on-quarter increase of about 27%.

AMD Chairman and CEO Lisa Su stated in the earnings announcement that the data center business revenue nearly doubled year-on-year, leading to record-breaking performance in the third quarter. The demand for AMD Instinct series GPUs and AMD EPYC server processors remains strong. With the gradual ramp-up of the Helios rack system and "Venice" architecture products, the company expects further acceleration in business growth in the fourth quarter.

01 Gross Margin and Operating Profit Increase Simultaneously

AMD's GAAP gross profit for this quarter was $7.210 billion, with a gross margin of 54%, an increase of 2 percentage points compared to the same period last year, remaining flat with the previous quarter. According to non-GAAP calculations, gross profit was $7.483 billion, with a gross margin of 56%, also up 2 percentage points year-on-year.

Both measures of gross margin improved compared to the same period last year, indicating that while revenue scale expanded, the overall profitability of the company's product mix also improved. The continuous increase in the revenue share of the data center business is an important background for observing this change.

In terms of operating expenses, GAAP operating expenses for this quarter were $4.378 billion, a year-on-year increase of 25%; non-GAAP operating expenses were $3.560 billion, a year-on-year increase of 29%. Among them, 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 AMD's continued investment in core technologies and products. As AI accelerator cards, high-performance server processors, and supporting software products continue to iterate, the company needs to continuously invest R&D resources to maintain product competitiveness and meet the growing demand in the data center market.

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

The growth rate of GAAP operating profit exceeded that of revenue, and the operating profit margin also increased by 7 percentage points. This indicates that the revenue growth this quarter not only expanded the profit scale but also enabled the company to achieve higher operating returns. Combined with the performance of gross margin, the growth of the data center business and the improvement of the overall profit structure supported AMD's profit growth this quarter.

02 Data Center Becomes Core of Growth

The wave of artificial intelligence data center construction is impacting the traditional PC market. The demand for memory chips in AI servers continues to grow, squeezing the supply of chips needed for laptops and desktops, and driving up prices, affecting PC chip manufacturers like AMD.

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

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

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

Business growth mainly came from the Instinct series AI accelerator cards and EPYC server processors. AMD disclosed in official materials that the Helios rack solution is powered by the AMD Instinct MI450 series GPUs and sixth-generation AMD EPYC processors, which have been deployed in the AI infrastructure of clients such as Anthropic, Meta, Microsoft, OpenAI, and Oracle Cloud Infrastructure.

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

The client and gaming business generated total revenue of $3.722 billion this quarter, a year-on-year decrease of 8%. Among them, client business revenue was $2.949 billion, a year-on-year increase of 7%; gaming business revenue was $773 million, a year-on-year decrease of 40%.

The client business maintained growth, mainly benefiting from the demand for laptops equipped with AMD Ryzen mobile processors and the company's product layout 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 the layout of the Ryzen AI Halo platform.

The gaming business was affected by changes in demand for semi-custom chips for gaming consoles, resulting in a 40% year-on-year decline in revenue. The growth in the client business was unable to offset the decline in the gaming business, leading to overall revenue for the client and gaming segment being lower than the same period last year.

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

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

03 Increased Investment to Ensure Capacity

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

This quarter, AMD's capital expenditure (CapEx) was $648 million, up from $258 million in the same period last year; cumulative capital expenditure for the first three quarters of 2026 reached $1.845 billion, compared to $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 accelerator cards and server processors.

AMD stated in its earnings materials that the company is continuously deepening cooperation with key customers and supply chain partners to support the product supply of 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 technological capabilities through acquisitions. The company disclosed this quarter that it has reached an agreement to acquire World Labs, further laying out model research and AI infrastructure; at the same time, it has reached an acquisition agreement with Taalas to introduce customized inference chip technology, expanding its technological capabilities in the AI inference field. Both transactions are currently in the agreement disclosure stage and have not yet been completed.

04 Q4 Revenue Expected to Increase by 66% Year-on-Year

AMD expects fourth-quarter revenue for fiscal year 2026 to be approximately $17 billion, with a fluctuation of 3% up or down. Based on the midpoint of guidance, fourth-quarter revenue is expected to increase by about 66% year-on-year and about 27% quarter-on-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 the non-GAAP gross margin for the fourth quarter 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 product shipment structure, business mix, and supply chain costs.

In this regard, The Wall Street Journal commented that the slight short-term narrowing of gross margin is mainly due to the high supply chain costs of the new generation rack products in the early stages of mass production, but this aligns with the normal profit curve during the large-scale delivery phase of hardware products and does not shake market confidence in its profitability.

CNBC pointed out that AMD's strong fourth-quarter guidance injects a dose of confidence into the capital markets, which have recently fluctuated due to concerns about an "AI infrastructure investment bubble." The report analyzed that although AMD still lags behind Nvidia in the AI accelerator field, its Helios rack design and technological barriers in server CPUs (EPYC series) are continuously expanding market share and successfully positioning itself as an indispensable "second source" in the AI computing supply chain of large technology companies.

Looking ahead to the fourth quarter, the market's focus will be on the delivery progress and capacity coordination of the Helios complete cabinet system, the Instinct MI450 series GPUs, and the next-generation EPYC processors.

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