AMD (AMD, Financial) reported robust financial results for the third quarter, achieving a revenue of $6.819 billion, representing an 18% year-over-year increase and a 17% sequential increase. The company's gross margin reached 50%, up 3 percentage points year-over-year and 1 percentage point sequentially.
Data center operations contributed significantly, accounting for over half of the company's total revenue at 52.5%, up from 48.57% in the previous quarter. In this sector, AMD generated $3.549 billion, marking a 122% year-over-year growth and a 25% sequential increase. The operating income for data centers reached $1.041 billion, a 240% year-over-year increase and a 40% sequential rise. The MI300 series emerged as AMD’s fastest-growing product, generating over $1 billion in sales in less than two quarters, with major cloud providers like Microsoft and Oracle Cloud expanding its availability.
In other business segments, client revenue totaled $1.881 billion, driven by strong demand for the Zen5 AMD Ryzen processors. Gaming revenue fell by 69% year-over-year and 29% sequentially due to decreased demand for semi-custom products. The embedded sector saw a 9.27% decline year-over-year but an 8% sequential increase as market conditions improved.
Despite AMD's better-than-expected Q3 performance, the market reacted to the company's conservative Q4 guidance, forecasting revenues around $7.5 billion with a gross margin of approximately 54%. CEO Lisa Su highlighted strong growth in data center products, particularly Instinct, and raised AMD's annual GPU revenue target to $5 billion.
AMD's strategic moves include enhancing its AI ecosystem through acquisitions of companies like Silo AI and ZT Systems. These efforts aim to strengthen AMD’s AI infrastructure capabilities and improve server design expertise to better meet the demands of AI-centric markets.
Recently, AMD, alongside major players like Intel, Meta, and Google, founded the Ultra Accelerator Link Consortium to improve AI system communications within data centers. This consortium aims to challenge NVIDIA’s NVLink dominance in high-speed, low-latency connectivity.
