Advanced Micro Devices NASDAQ: AMD reported record third-quarter 2026 revenue and profitability as demand for its data center processors and artificial intelligence accelerators accelerated, while the company projected a sharp increase in fourth-quarter sales and said it expects revenue growth of more than 80% in 2027.
Revenue rose 45% year over year to $13.4 billion in the third quarter, exceeding the high end of the company’s guidance. Non-GAAP diluted earnings per share increased 74% to $2.09. AMD said Data Center revenue nearly doubled from a year earlier, accounting for approximately 64% of total company revenue, compared with 47% a year ago.
“The third quarter was the largest and most profitable in our history as we began ramping our next-generation data center products,” Chair and CEO Lisa Su said during the company’s earnings call.
Data Center Drives Record Results
AMD’s Data Center segment generated a record $8.5 billion in revenue, up 97% year over year and 27% sequentially. Segment operating income rose 168% to $2.9 billion, while operating margin expanded to 34% from 25% a year earlier.
The company said server revenue benefited from more than doubling cloud and enterprise sales year over year, fueled by adoption of its EPYC processors. Su said hyperscalers added substantial EPYC server capacity during the quarter for internal services, public-cloud offerings and agentic AI applications.
AMD began revenue shipments of its EPYC Venice processors during the quarter and expects the first OEM systems to become available in the fourth quarter. According to Su, AMD’s OEM and ODM partners have committed more than 240 Venice platforms, about 20% more than for the prior Turin generation.
The company also launched Helion, a reference design for rack-scale EPYC systems designed for agentic infrastructure. Su said every major server OEM and ODM plans to offer Helion systems, with initial systems scheduled to ship during the fourth quarter.
In data center AI, AMD started volume shipments of MI455X accelerators and said customers including Anthropic, Meta, Microsoft, OpenAI and Oracle brought their first Helios racks online. The company expects Helios deployments to increase substantially in the fourth quarter as production ramps and OEM partners begin shipping systems.
Su said OpenAI selected Turin EPYC processors as host CPUs for its first custom accelerator platforms. AMD also cited EuroHPC’s selection of Instinct MI430X GPUs and sixth-generation EPYC processors for the LUMI-AI supercomputer, which is planned to begin operations in the second half of 2027.
Fourth-Quarter Outlook Calls for Revenue Acceleration
For the fourth quarter, AMD projected revenue of approximately $17 billion, plus or minus 3%. At the midpoint, the guidance would represent roughly 66% year-over-year growth and 27% sequential growth.
The company expects Data Center revenue to grow about 50% sequentially in the fourth quarter, driven by the continued ramp of its AI products and server processors. Chief Financial Officer Jean Hu said the Data Center AI business is expected to surpass the server CPU business in dollar terms during the quarter.
AMD forecast non-GAAP gross margin of about 55% for the fourth quarter and non-GAAP operating expenses of approximately $3.75 billion. Hu said the company expects operating expenses to grow at less than half the rate of revenue growth in 2027, supporting significant operating-margin expansion.
For 2027, Su said AMD expects server revenue to roughly double year over year and Data Center AI revenue to grow “significantly more than double.” The company expects Data Center to represent more than 80% of total revenue next year.
AMD said customer demand currently exceeds available supply. Su said the company has been working with suppliers to secure wafers, substrates, advanced packaging, memory and other components, while continuing to seek additional capacity.
- Third-quarter revenue: $13.4 billion, up 45% year over year.
- Third-quarter Data Center revenue: $8.5 billion, up 97% year over year.
- Third-quarter non-GAAP diluted EPS: $2.09, up 74% year over year.
- Fourth-quarter revenue outlook: approximately $17 billion, plus or minus 3%.
- 2027 revenue outlook: growth of more than 80%.
Client and Gaming Weaken as Embedded Growth Continues
Client and Gaming segment revenue declined 8% year over year to $3.7 billion. Client revenue rose 7% to $2.9 billion on demand for Ryzen mobile processors, but Gaming revenue fell 40% to $773 million, primarily because of lower semi-custom sales at this stage of the console cycle.
Su said PC sell-through slowed late in the quarter as higher memory and component costs pressured demand. AMD is aligning product shipments with sell-through to maintain healthy customer and channel inventory, and it is planning for global PC unit shipments to decline by a double-digit percentage in 2027.
The company expects its Client and Gaming segment to decline by more than 20% sequentially in the fourth quarter. Su said AMD intends to focus on enterprise, premium consumer and desktop-channel markets, where it believes it can outperform the broader market.
Embedded revenue increased 29% year over year and 14% sequentially to $1.1 billion, marking the fourth consecutive quarter of accelerating growth. AMD cited demand from aerospace and defense, automotive, communications and industrial customers, as well as data center-related demand for embedded CPUs and adaptive system-on-chips.
The company said it remains on track to close more than $18 billion in design wins during 2026.
Cash, Inventory and Acquisitions
AMD ended the quarter with $15.8 billion in cash, cash equivalents and short-term investments, and $7.1 billion in total debt. Inventory increased by about $3 billion sequentially to $11.5 billion as the company prepared to meet expected data center demand.
Free cash flow was $554 million, reflecting higher working-capital investment and capital expenditures related to capacity and equipment. AMD said it expects to continue investing in inventory and supply capacity to support growth in 2027.
AMD also announced planned acquisitions of Taalas, a developer of specialized inference silicon, and World Labs, a spatial-intelligence company led by co-founder and CEO Dr. Fei-Fei Li. Su said both transactions are expected to close by the end of the year, and Li is expected to join AMD as chief scientist.
About Advanced Micro Devices (NASDAQ:AMD)
Advanced Micro Devices, Inc NASDAQ: AMD is a global semiconductor company that designs high-performance computing, graphics and adaptive computing products. Its offerings serve data centers, personal computers, gaming systems, embedded markets and other specialized applications.
AMD's product portfolio includes Ryzen processors for desktop and notebook computers, EPYC server processors, Radeon graphics processing units, and Instinct accelerators for artificial intelligence and high-performance computing.
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