SANTA CLARA, Calif. — Advanced Micro Devices posted record sales in the third quarter. It expects an even bigger fourth.
Revenue came in at $13.4 billion. That is 45% higher than a year earlier. The Data Center business did most of the lifting, with sales there nearly doubling.
For the last three months of the year, AMD is looking for about $17 billion, give or take 3%. Hit the midpoint, and sales would be up roughly 66% from a year ago. That’s also 27% more than the third quarter brought in.
The company is aiming for an adjusted gross margin of around 55%, and it noted the outlook reflects what it expects now and could turn out materially different.
Lisa Su, AMD’s chair and CEO, said demand for its Instinct and EPYC chips kept getting stronger. She expects growth to speed up this quarter as AMD scales production of Helios and “Venice.”
“We delivered a record quarter with revenue exceeding the high end of our guidance.”
Profit outruns sales
Net income was $2.4 billion, or $1.46 per diluted share. A year earlier it was $1.2 billion, or 75 cents, and the latest figure is 95% higher. Operating income reached $2.8 billion, more than double the year before. Gross margin was 54%, up from 52%.
On an adjusted basis, leaving out stock-based pay, acquisition-related amortization and other items, AMD earned $2.09 a share. That’s 74% more than the $1.20 it made a year ago. Adjusted net income came to $3.5 billion on a 56% gross margin.
One large charge stayed out of those adjusted numbers: a $1.1 billion expense from remeasuring warrants AMD issued to certain customers. The company said their value moves with its stock price and other valuation assumptions.
Chief Financial Officer Jean Hu pointed to adjusted earnings growing faster than revenue. That, she said, showed “the significant operating leverage in our business model.” AMD’s fourth-quarter outlook, she added, reflects faster revenue and earnings growth, driven by Data Center demand.
Data Center carries the quarter
Data Center sales hit a record $8.5 billion, up 97%. AMD credited strong demand for its EPYC processors and the launch of its Instinct MI450 Series GPUs. The unit’s operating income jumped to $2.9 billion from $1.1 billion.
AMD’s first Helios rack-scale systems pair MI450 Series GPUs with 6th Gen EPYC CPUs. The company said Anthropic, Meta, Microsoft, OpenAI and Oracle Cloud Infrastructure are now running models and workloads on them.
Gaming slides
Gaming was the weak spot. Revenue there fell 40% to $773 million as semi-custom and graphics sales dropped off.
PC chips did better. Client revenue rose 7% to $2.9 billion on sales of Ryzen mobile processors. Taken together, the Client and Gaming segment slipped 8% to $3.7 billion.
Embedded revenue climbed 29% to $1.1 billion, with aerospace and defense, automotive, communications and industrial markets out front.
Cash and deals
Free cash flow was $554 million, down from $1.5 billion a year earlier. AMD ended the quarter holding $15.8 billion in cash, cash equivalents and short-term investments. Its total debt more than doubled over the year, to $7.1 billion from $3.2 billion.
The company also has agreements to buy World Labs, a model research company, and Taalas, which works on specialized inference silicon. The release didn’t disclose terms for either deal.
Executives were scheduled to walk through the results on a conference call at 5 p.m. EST Tuesday.
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