With the accelerated growth of data center business, AMD expects its quarterly revenue to exceed market expectations.

Reuters November 3 - AMD AMD.O on Tuesday forecast that fourth-quarter revenue would exceed Wall Street expectations. As the company ramps up its multi-billion dollar investment efforts to challenge NVDA.O's dominance in the AI semiconductor market, strong demand for its chips is fueling growth.

The company’s third-quarter data center revenue nearly doubled, benefiting from artificial intelligence workloads shifting to running models in real-world applications, which boosted demand for its GPUs and CPUs.

This enabled AMD to take market share from rival Intel INTC.O, which last week forecast quarterly revenue (link) that fell far short of expectations, triggering a global sell-off in chip stocks (link).

According to data compiled by London Stock Exchange Group (LSEG), AMD expects fourth-quarter revenue of around $17 billion (plus or minus 3%), higher than the average analyst estimate of $16.23 billion.

The company’s adjusted gross margin is expected to be about 55%, below the expected 55.27% and down from 56% in the third quarter.

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AMD’s share price has more than doubled so far this year, after its market capitalization briefly entered the $1 trillion (link) club.

AMD has accelerated the launch of its AI products, expanding from standalone chips into rack-level systems to compete with Nvidia.

The company’s flagship Helios rack system, which combines the MI455X accelerator with the all-new “Venice” server chip, has already entered mass production, with plans to further ramp up capacity in the fourth quarter. The first systems are being tested at Meta META.O.

In February this year, the company agreed to sell up to $60 billion worth of AI chips to Meta (link) over five years. Under the agreement, the Facebook parent company could acquire up to a 10% stake in the chipmaker.

AMD's third-quarter revenue grew 45% to $13.38 billion, above the estimate of $13.09 billion. Data center revenue surged 97% to a record $8.55 billion, exceeding the expected $8.2 billion.

Adjusted earnings per share were $2.09, higher than the expected $1.95.

The semiconductor industry is also facing a global memory shortage. Although manufacturers are racing to expand capacity, high-bandwidth memory used in AI processors remains expensive and in tight supply.

AMD’s client and gaming business unit (which includes its PC chips and gaming console processors) saw third-quarter sales fall 8% to $3.72 billion, below the expected $3.79 billion.

Beyond its chip business, in September AMD agreed to acquire World Labs—a startup founded by Li Feifei that specializes in AI for 3D environment modeling—for $8.2 billion in stock (link), bolstering its position in physical AI systems research.

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