AMD's Data Center Business Just Became the Whole Story

AMD's stock jumped 7% in extended trading Tuesday after the company posted third-quarter results that beat Wall Street's expectations across the board, with data center revenue nearly doubling from a year earlier and now making up the clear majority of the business.

The numbers: adjusted earnings of $2.09 per share against a Street estimate of $1.95, and revenue of $13.38 billion versus the $13.09 billion analysts had modeled, according to LSEG consensus estimates. That's up 45% from the $9.25 billion AMD reported a year earlier, the company said in a statement.

The real story is what's driving that growth. Data center revenue now accounts for 64% of AMD's total business, up sharply from 47% a year ago. CEO Lisa Su said in a press release that she expects growth in data center processors to "accelerate further," and that she isn't worried about AMD's ability to keep up with demand. "With our leadership product portfolio and deep customer and supply chain relationships, we are confident in our ability to sustain very strong revenue growth and expanding profitability over the coming years," she said.

A rivalry with two very different reactions

AMD's report lands just days after Intel disclosed its own data center surge, with that segment's revenue up 78% in the third quarter. Yet Intel's stock cratered 29% on Friday, as investors focused instead on weak guidance and doubts about whether Intel could actually meet demand. AMD, reporting similar underlying strength in the same part of the business, got the opposite reaction. The contrast says something about how closely Wall Street is scrutinizing not just growth numbers in AI infrastructure, but the credibility of each company's forward outlook.

AMD has spent years playing catch-up to Nvidia in the market for AI graphics processors, or GPUs. What's notable now is that AMD's central processing units, or CPUs — the workhorse chips that handle general computing tasks rather than the specialized AI math GPUs are built for — are having their own moment, driven by the rise of agentic AI applications like Meta's Muse. These apps rely on AI systems that can act autonomously over extended periods, and AMD's server CPUs are well suited to that work because they power the virtual machines these agents run on and can operate continuously for hours. That demand helped push AMD shares to a record in October.

The PC side is still rough

Outside the data center, AMD's business looks a lot less exciting. The company is one of the two dominant makers of x86 processors — the traditional chip architecture that powers most laptops and desktops, as opposed to the Arm-based chips used by Qualcomm and Apple. Intel blamed the struggling PC market for its disappointing outlook last week, and AMD is exposed to the same headwinds. Global PC shipments fell 4% in the second quarter from a year earlier, according to Counterpoint Research, largely because of rising costs for memory and other components.

AMD bundles its PC and gaming chip sales into a single segment, and that combined business brought in $3.7 billion in revenue, down 8% from a year ago. Gaming revenue alone fell 40%. It's a reminder that even as AMD's data center business roars, the rest of the company is navigating a genuinely weak consumer hardware market.

Looking ahead, AMD guided to about $17 billion in revenue for the fourth quarter, well above the $16.2 billion analysts had expected, according to LSEG. The company sees gross margin landing around 55% for the quarter, just a touch below the 55.3% average estimate tracked by StreetAccount.

Chasing Nvidia with Helios

Beyond CPUs, AMD also sells data center GPUs and complete rack-scale systems branded Helios, built to compete directly with Nvidia's Grace Blackwell and upcoming Vera Rubin platforms. That effort is gaining real customers: Meta, Microsoft, Anthropic, OpenAI and Oracle are all starting to deploy Helios in their data centers. Meta said last week its Helios racks are already operational, and AMD has agreed to invest $1 billion in Meta's equity offering as part of the relationship.

AMD is also backing Anthropic with a commitment of up to $5 billion, a deal that takes on added weight now that Anthropic has filed its long-awaited IPO prospectus and is moving closer to what could be one of the biggest public offerings in recent memory.

On the supply side, Su said during a trip to Taiwan in October that she plans to "substantially increase" AMD's supply in 2027. Like Nvidia's Jensen Huang, she's made repeated visits this year to Taiwan and South Korea to meet with key manufacturing partners, including Taiwan Semiconductor Manufacturing Company and memory makers SK Hynix and Samsung — relationships that matter enormously as AI chip demand strains global supply chains.

AMD is also betting beyond chips themselves. In September, it announced plans to acquire World Labs for $8.2 billion in an all-stock deal. The San Francisco startup, founded by AI researcher Fei-Fei Li, is building what's known as a world model — AI designed to simulate 3D physical environments, aimed at helping develop robots and other AI systems that need to understand and operate in the real world.

AMD's stock is up roughly 125% this year, though it had posted three straight days of losses heading into Tuesday's report amid a broader selloff tied to worries about overspending across the AI industry. Tuesday's rally suggests that for now, at least, strong data center numbers are enough to override those broader anxieties — even as the same AI spending boom that's lifting AMD's server business continues to raise questions about how sustainable all of it really is.