AMD's Data Center Sales Nearly Double to $8.5 Billion, and It Tells Investors to Expect More Than 80% Revenue Growth in 2027
AMD said on November 3 that third-quarter revenue rose 45% to $13.4 billion, with data center revenue up 97% to a record $8.55 billion, and guided fourth-quarter revenue to about $17 billion. CEO Lisa Su told analysts AMD expects revenue to grow more than 80% in 2027, above the 77% analysts expected, Reuters reported. Shares rose 8% after hours, a week after AI chip stocks sold off. Gaming revenue fell 40% as memory shortages pushed up consumer prices.
AMD's quarter is a direct answer to last week's fear that AI chip demand was cresting: its data center business nearly doubled, and the company told investors 2027 will be bigger still. AMD reported third-quarter revenue of $13.38 billion, up 45%, on November 3, with data center revenue up 97% to a record $8.55 billion, ahead of the $8.20 billion analysts expected, Reuters reported citing LSEG data.
The outlook#
AMD expects fourth-quarter revenue of about $17 billion, plus or minus 3%, above the $16.23 billion analysts had expected, according to Reuters. On the earnings call, CEO Lisa Su said AMD expects revenue to "grow more than 80 percent in 2027," adding that "data center will be the largest contributor," The Verge reported. Analysts had expected 77% growth, Reuters said. CFO Jean Hu said that looking ahead to 2027, AMD thinks data center "will be more than 80 percent of total company revenue," according to The Verge.
AMD's shares rose 8% in extended trading, Reuters reported. AMD lost 10.9% in the October 30 chip selloff, when investors dumped AI suppliers.
Margins and racks#
Adjusted earnings were $2.09 per share, against estimates of $1.95, Reuters said; AMD reported GAAP earnings of $1.46 per share. AMD expects an adjusted gross margin of about 55% next quarter, down from 56% in the third quarter, according to Reuters. Its Helios rack, which combines the MI455X accelerator with "Venice" server chips, is in production ahead of a larger ramp in the fourth quarter, and the first systems are being tested at Meta, Reuters reported.
The consumer side#
Gaming revenue fell 40% to $773 million, The Verge reported, as memory shortages driven by AI data centers push up prices for PCs and consoles. Su said AMD is "planning with the current environment for a down year for 2027" in consumer markets, according to The Verge, and AMD expects PC unit shipments to fall by a double-digit percentage next year, Reuters said.
Limits#
- The 2027 growth figure is a forecast Su gave on the call; AMD's release gives formal guidance only for the fourth quarter.
- Analyst estimates are LSEG figures as reported by Reuters.
- AMD has not said how much of its data center revenue comes from AI accelerators rather than server CPUs.