amdbeatsexpectations-ainarrativecontinues

Advanced Micro Devices forecast fourth-quarter revenue of $17 billion, plus or minus 3%, easily topping the average analyst estimate of $16.3 billion and sending the shares up about 7% in late trading, Bloomberg reported. The outlook offered fresh evidence that AI spending is sustainable, easing nerves after weeks of selling in chip and tech stocks over bubble concerns.
"AMD's earnings are simultaneously a test of its own performance and of the broader AI trade," Emarketer analyst Jacob Bourne said in a note. The results "will give investors encouragement given the recent tech and semiconductor selloff, as investors increasingly scrutinize AI spending and its returns."
Third-quarter sales rose 45% to $13.4 billion, with profit of $2.09 a share excluding certain items; analysts had expected $13.1 billion and $1 .97. Data center revenue nearly doubled to $8.5 billion against a $8.2 billion consensus. PC and gaming-related sales shrank 8% to $3.7 billion, as the data center boom absorbs memory supply and pushes up component costs.
One soft spot: gross margin will narrow to about 55% in the fourth quarter from 56% in the prior period.
On the analyst call, Chief Executive Officer Lisa Su said the company has grown more optimistic about long-term growth. AMD expects revenue to rise more than 80% next year, ahead of the 75% Wall Street projects, with data center sales more than doubling and accounting for as much as 80% of total revenue. Su said AMD "has strong confidence in our ability to sustain exceptional revenue growth for years to come, with earnings growing even faster." She also said the overall PC market will decline by a double-digit percentage next year.
AMD's outlook, paired with a strong forecast from server maker Super Micro Computer, sparked a late-session rally across AI equipment makers and cloud providers, lifting CoreWeave, Nebius, Dell and Hewlett Packard Enterprise.
Even after recent turbulence, AMD shares have more than doubled this year and the company's valuation reached $1 trillion in September. It continues to take CPU share from Intel, which posted its worst stock decline in decades after a weak report last week, but remains well behind Nvidia in AI accelerators. AMD is launching new CPU and accelerator lines and challenging Nvidia more directly with its Helios server design, while Nvidia keeps updating its own lineup and expanding into software, networking and full systems.