Advanced Micro Devices (AMD) saw its shares climb approximately 5% in after-hours trading on Tuesday after the chipmaker delivered stronger-than-expected third-quarter results and issued an optimistic revenue outlook. The report helped ease concerns about the sustainability of artificial intelligence spending, which had been heightened by Intel's disappointing forecast last week.
The stock had risen as much as 8% in extended trading before settling around 5% higher. Despite a recent pullback—AMD lost about 23.4% over the past month as investors reassessed semiconductor valuations—the stock has more than doubled in 2026. The strong quarterly performance restored confidence in AMD's growth trajectory, particularly as demand for its data center processors and AI accelerators continues to accelerate.
Data center business drives earnings beat
AMD reported third-quarter revenue of $13.38 billion, up 45% year over year and above analyst expectations of approximately $13.09 billion. Non-GAAP earnings came in at $2.09 per share, beating the consensus estimate of $1.95. Non-GAAP gross margin reached 56%, compared with 54% a year earlier, while GAAP net income increased 95% to $2.4 billion. GAAP gross profit climbed 51% to $7.21 billion.
The standout performer was the data center division, where revenue nearly doubled to a record $8.55 billion, an increase of 97% year over year. This growth was fueled by strong demand for EPYC server processors and Instinct AI accelerators. The segment is becoming increasingly important as AMD expands its challenge to Nvidia in the AI computing market. Its Helios rack-scale systems, which combine processors, accelerators, and networking components, are also designed to compete with Nvidia's integrated AI infrastructure offerings.
Lisa Su forecasts bumper growth in 2027
AMD CEO Lisa Su struck an optimistic tone about the company's growth prospects, saying she expects overall revenue to increase more than 80% in 2027. That compares with Wall Street's forecast of approximately 77% growth. Su also told analysts that data center products would account for around 80% of the company's sales next year and drive most of its revenue and earnings growth.
"We see demand across the data-center business, across our CPU business, as well as our data-center AI business," Su said during the earnings call. AMD also issued stronger-than-expected fourth-quarter guidance, projecting revenue of approximately $17 billion, plus or minus 3%. The midpoint implies year-over-year growth of around 66%.
PC and gaming weakness
Revenue from AMD's client and gaming division fell 8% to $3.72 billion, missing analyst expectations of $3.79 billion. Gaming revenue declined 40% to $773 million, reflecting weaker sales of semi-custom chips and graphics products. Su said AMD expects PC shipments across the industry to decline by a double-digit percentage in 2027, although the company believes it can outperform the broader market.
Goldman Sachs remains bullish
Goldman Sachs reiterated its Buy rating on AMD and maintained a $700 price target following the results. Analyst James Schneider said stronger earnings and guidance could support further gains. The firm will particularly watch the ramp-up of AMD's MI450 accelerators at key customers in the fourth quarter of 2027, alongside the sustainability of server CPU growth.
The latest results offer investors fresh evidence that AMD is gaining from expanding AI infrastructure demand, although its ability to meet customer requirements amid tight memory and advanced packaging supply will remain important.
This article is for informational purposes only and does not constitute financial advice.
