AMD forecasts quarterly revenue above estimates as data-centre growth accelerates

AMD forecast fourth-quarter revenue above Wall Street estimates on Tuesday (Nov 3), buoyed by strong demand for its chips as its multibillion-dollar effort to challenge Nvidia’s dominance of the AI semiconductor market gains momentum.

Shares of the company jumped over 7.5 per cent in extended trading. The stock has more than doubled so far this year. Intel shares rose 2 per cent, Nvidia stock climbed over 1 per cent and Broadcom also advanced 1.2 per cent.

AMD, which nearly doubled its data-centre revenue in the third quarter, is benefiting as a shift in AI workloads toward running models in real-world applications drives demand for its graphics processing units and central processors.

This has enabled AMD to capture market share from rival Intel, which last week forecast quarterly revenue well below estimates and triggered a global selloff in chip stocks.

AMD expects fourth-quarter revenue of about US$17 billion, plus or minus 3 per cent, above analysts’ average estimate of US$16.23 billion, according to data compiled by LSEG.

The company’s adjusted gross margin is expected to be about 55 per cent, in line with estimates of 55.27 per cent and down from 56 per cent in the third quarter.

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AMD has stepped up AI product rollouts, moving beyond standalone chips to compete with Nvidia’s rack-scale systems.

The company’s flagship Helios rack, combining its MI455X accelerator and new “Venice” server chips, is in production and set for a larger ramp-up in the fourth quarter. The initial systems are being tested at Meta.

In February, the company agreed to sell up to US$60 billion worth of AI chips to Meta over five years in a deal that allows the Facebook owner to purchase as much as 10 per cent of the chip firm.

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AMD’s third-quarter revenue rose 45 per cent to US$13.38 billion, beating estimates of US$13.09 billion. Data-centre revenue jumped 97 per cent to a record US$8.55 billion, exceeding estimates of US$8.20 billion.

Adjusted profit came in at US$2.09 per share, compared with estimates of US$1.95.

The semiconductor industry is also grappling with a global memory shortage, leaving expensive high-bandwidth memory used in AI processors in scarce supply as manufacturers race to increase production.

Third-quarter sales in AMD’s client and gaming segment, home to its PC chips and console processors, fell 8 per cent to US$3.72 billion, missing estimates of US$3.79 billion.

Beyond chips, AMD in September agreed to buy Fei-Fei Li’s World Labs, a startup building AI that models 3D environments, for US$8.2 billion in stock, gaining a foothold in research on physical AI systems. REUTERS