AMD Q3 Revenue Reaches $13.4 Billion, Driven by Data Center Growth

Original author: Su Yang

Original editor: Xu Qingyang

Source: Tencent Tech

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

The company's revenue for the quarter reached $13.377 billion, representing a 45% year-over-year increase and a 16% sequential increase, surpassing Wall Street’s expectation of $10.9 billion. Data center operations emerged as the primary growth driver this quarter, generating $8.546 billion in revenue, a 97% year-over-year increase, and accounting for 64% of the company’s total revenue.

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

Driven by earnings that surpassed Wall Street expectations, AMD surged as much as 8% in after-hours trading.

AMD expects fourth-quarter revenue to reach approximately $17 billion, representing year-over-year growth of about 66% and quarter-over-quarter growth of about 27% based on the midpoint of guidance.

Dr. Lisa Su, Chair and CEO of AMD, stated in the earnings statement that data center revenue nearly doubled year-over-year, driving the company to record third-quarter results. Demand for AMD Instinct series GPUs and AMD EPYC server processors remains strong. With increased production of the Helios rack-scale system and products based on the "Venice" architecture, the company expects further acceleration in business growth during the fourth quarter.

AMD's GAAP gross profit for this quarter was $7.21 billion, with a gross margin of 54%, up 2 percentage points year-over-year and flat compared to the prior quarter. On a non-GAAP basis, gross profit was $7.483 billion, with a gross margin of 56%, also up 2 percentage points year-over-year.

The gross margins for both segments have improved compared to the same period last year, indicating that the company’s overall product mix profitability has increased alongside revenue growth. The continuing rise in revenue contribution from the data center business is an important context for observing this change.

For operating expenses, GAAP operating expenses for the quarter were $4.378 billion, a 25% year-over-year increase; non-GAAP operating expenses were $3.560 billion, a 29% year-over-year increase. Of this, GAAP research and development expenses were $2.803 billion, compared to $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 related software products undergo continuous iteration, the company must consistently allocate R&D resources to maintain product competitiveness and meet the growing demands of the data center market.

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

GAAP operating profit grew faster than revenue, and the operating margin improved by 7 percentage points. This indicates that the revenue growth this quarter not only expanded profit scale but also enhanced the company’s operational profitability. Combined with gross margin performance, the growth in data center business and overall improvement in profit structure supported AMD’s profit growth this quarter.

The boom in AI data center construction is impacting the traditional PC market. Growing demand for memory chips in AI servers is squeezing supply for chips needed in laptops and desktops, driving prices higher and affecting PC chipmakers such as AMD.

Meanwhile, AMD is expanding its presence in the AI infrastructure market by launching next-generation CPUs and AI accelerators, along with the Helios rack-scale server solution.

AMD's business is primarily divided into three segments: data center, client and gaming, and embedded. In the third quarter, the data center segment continued to expand its lead, while the client and gaming segment was impacted by a decline in gaming sales, and the embedded segment sustained its recovery trend.

Data center revenue for the quarter was $8.546 billion, representing a 97% year-over-year increase and a 27% sequential increase; operating profit was $2.882 billion, up 168% year-over-year. Revenue from this segment accounted for approximately 64% of the company’s total revenue, a significant increase from 47% in the same period last year, making it AMD’s largest source of revenue and profit.

Business growth is primarily driven by the Instinct series of AI accelerator cards and EPYC server processors. AMD disclosed in its official materials that the Helios rack-scale solution, powered by AMD Instinct MI450 series GPUs and sixth-generation AMD EPYC processors, is already deployed in AI infrastructure for customers including Anthropic, Meta, Microsoft, OpenAI, and Oracle Cloud Infrastructure.

As generative AI applications evolve toward agentic AI, model inference, task scheduling, and complex computations demand greater computing power from data centers. GPUs handle AI training and inference tasks, while server CPUs manage system orchestration and general-purpose computing, with demand for both product categories driving growth in AMD’s data center business.

The combined revenue from the client and gaming businesses this quarter amounted to $3.722 billion, a decrease of 8% year-over-year. Revenue from the client business was $2.949 billion, an increase of 7% year-over-year, while revenue from the gaming business was $773 million, a decrease of 40% year-over-year.

Client business continues to grow, primarily driven by demand for laptops equipped with AMD Ryzen mobile processors and the company’s product positioning in the commercial and high-end workstation markets. AMD has also launched the Ryzen AI Max PRO 400 series processors for local AI computing and is advancing its Ryzen AI Halo platform initiatives.

The gaming business experienced a 40% year-over-year revenue decline due to factors such as changes in demand for semi-custom chips for gaming consoles. Growth in the client business failed to offset the decline in the gaming segment, resulting in overall revenue for the client and gaming divisions falling below last year’s levels.

Embedded business revenue for the quarter reached $1.109 billion, up 29% year-over-year and 14% quarter-over-quarter; operating profit reached $453 million, up 60% year-over-year.

As demand in aerospace, defense, automotive, communications, and industrial sectors gradually improves, AMD’s embedded business continues to recover following prior inventory adjustments. This quarter, AMD also unveiled AMD Ross, an AI agent tool for embedded system development, and began delivering Versal AI Core samples to customers for long-duration space missions, further expanding its product portfolio in the embedded and edge computing domains.

As of September 26, 2026, AMD held $15.776 billion in cash, cash equivalents, and short-term investments, with total assets reaching $94.812 billion and shareholders' equity at $68.389 billion. For the quarter, the company generated $1.202 billion in cash flow from operating activities and $554 million in free cash flow; cumulative free cash flow for the first nine months of 2026 reached $4.678 billion.

For this quarter, AMD's capital expenditure (CapEx) was $648 million, up from $258 million in the same period last year; the cumulative CapEx for the first nine months 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 its capital investment to support business expansion and product delivery.

Advanced process wafer manufacturing, high-bandwidth memory (HBM), and advanced packaging are critical components in the supply chain for AI accelerator cards and server processors.

AMD stated in its earnings materials that the company is continuously deepening collaboration with key customers and supply chain partners to support the supply of Instinct series GPUs and EPYC processors. As the data center business scales, capacity assurance and supply chain coordination will impact the delivery timeline of new products.

In addition to expanding its existing business footprint, AMD has supplemented its technical capabilities through acquisitions. The company disclosed this quarter that it has reached an agreement to acquire World Labs to further strengthen its efforts in model research and AI infrastructure, as well as an agreement to acquire Taalas to integrate customized inference chip technology and expand its capabilities in AI inference. Both transactions are currently in the announcement phase and have not yet been completed.

AMD expects revenue for the fourth quarter of fiscal year 2026 to be approximately $17 billion, with a ±3% variance. Based on the midpoint of the guidance, fourth-quarter revenue is expected to increase approximately 66% year-over-year and approximately 27% quarter-over-quarter.

This figure significantly exceeds the previous market consensus of approximately $16.2 to $16.3 billion, reflecting the company's expectation that its data center business will continue to maintain strong growth momentum.

Regarding gross margin, AMD expects its non-GAAP gross margin for the fourth quarter to be approximately 55%, a 1 percentage point decrease from 56% in the third quarter. Actual gross margin performance will still be influenced by factors such as product shipment mix, business portfolio, and supply chain costs.

In response, The Wall Street Journal noted that the slight short-term compression in gross margin was primarily due to high supply chain costs during the initial mass production phase of the new-generation cabinet products, but this aligns with the normal profit trajectory for hardware products in the large-scale delivery stage and has not shaken market confidence in its profitability.

CNBC noted that AMD's strong guidance for the fourth quarter provided a boost to capital markets, which had recently experienced volatility due to concerns about an "AI infrastructure investment bubble." The report analyzed that although AMD still lags behind NVIDIA in the AI accelerator space, it is steadily expanding its market share through its Helios rack-scale design and technological advantages in server CPUs (EPYC series), successfully positioning itself as an indispensable "second source" in the AI computing supply chain for major tech companies.

Looking ahead to the fourth quarter, market focus will center on the delivery progress and production synergy of the Helios rack system, the Instinct MI450 series GPUs, and the next-generation EPYC processors.

Whether AMD can steadily convert continuously growing AI computing demands into stable product shipments and revenue, while navigating constraints in upstream advanced processes and memory chip capacity, will be key to determining its performance trajectory over the next several quarters.