AMD Q3 Earnings Beat Estimates, Bolstering AI Partnerships Outlook

• Data center revenue hit $4.34 billion, up 22% year-over-year, fueled by demand for Instinct GPUs in AI infrastructure.

• Client segment revenue reached $2.75 billion, a 46% increase, driven by strong processor sales.

• Gaming revenue surged 181% to $1.30 billion, boosted by new product launches and partnerships.

Explore AMD’s Q3 earnings: $9.25B revenue beats estimates with AI partnerships shining. Discover impacts on tech sectors—read now for key insights.

What were AMD’s Q3 2024 earnings highlights?

AMD’s Q3 earnings showcased robust growth with adjusted earnings per share at $1.20, exceeding the $1.16 consensus estimate, and revenue of $9.25 billion, topping the $8.74 billion forecast. This represents a 36% year-over-year revenue increase, ending September 27. Net income rose to $1.24 billion, or 75 cents per share, from $771 million the prior year, though shares dipped in after-hours trading due to in-line gross margin guidance.

How do AMD’s AI partnerships influence future growth?

AMD’s strategic AI infrastructure partnerships are expanding rapidly, positioning the company as a key player in high-performance computing. Last month, AMD signed an agreement with OpenAI, potentially leading to OpenAI acquiring up to 10% of AMD’s stake while deploying 6 gigawatts of Instinct GPUs across generations, starting with 1 gigawatt in the second half of next year. This shift from Nvidia dominance underscores diversification in AI supply chains.

Oracle plans to deploy 50,000 Instinct MI450 chips in its cloud next year, enhancing scalable AI solutions. AMD’s new Helios rack-scale design supports Meta’s Open Rack Wide standard, improving data center efficiency. Collaborations with Cisco and G42 will build large-scale clusters in the UAE using Instinct MI355X GPUs, while IBM and AMD support Zyphra’s multimodal models with MI350X GPUs. Cohere is scaling enterprise use of Instinct infrastructure, and Vultr, DigitalOcean, and Tech Mahindra are integrating various MI series GPUs into their clouds. The U.S. Department of Energy’s Lux AI supercomputer will leverage MI355X GPUs, EPYC CPUs, and Pensando networking, with the 2028 Discovery system using next-gen EPYC Venice CPUs and MI430X GPUs. These partnerships, as noted by AMD executives, exclude China-bound MI308 shipments from current guidance, reflecting geopolitical considerations.

Frequently Asked Questions

What drove AMD’s data center revenue growth in Q3?

AMD’s data center segment generated $4.34 billion, up 22% from last year and beating the $4.13 billion estimate, primarily due to surging demand for Instinct GPUs in AI training and inference. Partnerships with major cloud providers and supercomputing projects contributed significantly, demonstrating AMD’s expertise in high-performance computing hardware.

How has AMD’s gaming segment performed recently?

AMD’s gaming revenue jumped 181% to $1.30 billion, surpassing the $1.05 billion forecast, thanks to expanded product lines like Ryzen Threadripper 9000WX and PRO 9000X processors. FidelityFX Super Resolution 4 now supports over 85 games, enhancing performance for gamers and developers alike.

Key Takeaways

• Strong Earnings Beat: Q3 revenue and EPS exceeded expectations, signaling continued momentum in data center and client segments despite stock pressure.
• AI Partnership Expansion: Deals with OpenAI, Oracle, and others highlight AMD’s growing role in AI infrastructure, with multi-gigawatt GPU deployments planned.
• Future Guidance Optimism: Q4 revenue outlook of $9.6 billion implies 25% growth; focus on diversifying beyond Nvidia to capture market share.

Conclusion

AMD’s Q3 earnings reflect a company thriving in AI infrastructure partnerships and segment growth, with data center revenue up 22% and gaming surging 181%. As AMD’s AI partnerships deepen and new products like Instinct MI series GPUs roll out, the firm is well-positioned for sustained expansion in high-performance computing. Investors should monitor Q4 guidance execution for ongoing opportunities in this dynamic sector.

AMD reported third‑quarter numbers that beat Wall Street estimates on both revenue and earnings per share, but the company’s gross‑margin outlook did not come in stronger than expectations. That was enough to push the stock lower in extended trading. The company said adjusted earnings per share came in at $1.20, beating the $1.16 consensus. Revenue reached $9.25 billion, ahead of the $8.74 billion estimate. Revenue rose 36% compared to the same quarter last year.

The quarter ended on September 27. Net income was $1.24 billion, or 75 cents per share, up from $771 million, or 47 cents per share, in the same quarter a year ago.

For the fourth quarter, AMD guided to about $9.6 billion in revenue, which implies 25% growth year over year. Analysts were expecting around $9.15 billion. The company said it expects an adjusted gross margin of 54.5%, which matched StreetAccount’s forecast. AMD repeated that the guidance does not include any revenue from shipments of its Instinct MI308 chips to China.

Executives said during the release, “We are not including revenue from China‑bound MI308 shipments in the outlook at this time,” repeating the same stance from last quarter. AMD shares had climbed 107% year‑to‑date ahead of these results, while the Nasdaq had risen 21% over the same period.

Client revenue came in at $2.75 billion, up 46%, beating the $2.61 billion consensus. Gaming revenue totaled $1.30 billion, up 181%, above the $1.05 billion estimate. Amazon, a meaningful cloud customer, disclosed in a filing that it sold all 822,234 of its AMD shares as of September 30. The position was originally built in the first quarter. AMD released ROCm 7 software to improve training and inference performance. The company also completed the divestiture of its ZT Systems data center manufacturing business to Sanmina.

AMD partners expanded cloud services powered by 5th Gen AMD EPYC processors. AWS said its new Amazon EC2 M8a instances deliver up to 30% better performance than the prior generation. Oracle introduced new X11 platforms powered by the same processors. IBM and AMD also announced plans to combine quantum computing with high‑performance compute in future architectures.

AMD updated its PC and gaming lines with Ryzen Threadripper 9000WX, Threadripper PRO 9000X, and FSR 4. FSR 4 support doubled to more than 85 games. The company expanded its embedded line with AMD EPYC Embedded 4005 and Ryzen Embedded 9000 processors for industrial and edge computing.