AMD Beats Wall Street Expectations as it Pivots to Data-Center First Status -- Second Update

By Robbie Whelan

Advanced Micro Devices beat Wall Street's sales expectations and made progress in its transition to becoming a data center-first company, even as a deal it made last year with OpenAI weighed on its third-quarter net income.

The chip designer reported $13.4 billion in sales in the quarter that ended September 26th. Analysts polled by FactSet had expected sales of $13.1 billion.

Sales of data-center chips nearly doubled from the year-earlier period to $8.5 billion. The company had projected that revenue from data-center chips would rise 80%.

Shares rose 8.5% in post-close trading.

AMD has two key businesses: selling more basic processors, such as the CPUs used in personal computers and gaming consoles, and selling advanced GPUs, which are the chips that power the data-center servers used to train and run AI models.

A year ago, the data center segment accounted for 47% of AMD's total revenue. This quarter it rose to 64% of sales.

Major partnerships with big AI companies and strong sales for a suite of new products with names like Helios and Venice have driven AMD's share price up nearly 120% so far this year. Over the past month, however, the company's stock has dropped 23% as fears about an AI infrastructure bubble have intensified.

Tuesday's results underscore how much progress AMD has made in diversifying its business to capitalize on the AI boom and trying to catch up with Nvidia, by far the market-leader in the data-center chips known as GPUs.

"We delivered a record quarter with revenue exceeding the high end of our guidance," Lisa Su, AMD's chief executive officer, said. "We are confident in our ability to sustain very strong revenue growth and expanding profitability over the coming years."

Last week, Intel, AMD's top rival in developing CPUs, watched its shares plummet more than 20% in a day after the company reported weakness in PC sales. Intel's stock has fallen 48% in the past month as investors grew concerned that the company is too reliant on income from consumer products like PCs and doesn't have enough of a foothold in AI.

AMD, which like many tech companies uses non-GAAP accounting for its finances, reported net income of $3.5 billion for the quarter, higher than the $3.2 billion predicted by analysts polled by FactSet. Gross income margins were 56%, in line with analyst expectations.

In the September quarter, AMD reported an accounting charge of $1.1 billion related to the company's megadeal last year with OpenAI, which was mostly offset by an income tax provision.

Under the terms of last year's agreement, OpenAI committed to paying tens of billions of dollars to buy up to 6 gigawatts worth of computing power using AMD's MI450 chips, its latest and most-advanced generation of AI processors.

In return, AMD gave OpenAI warrants to buy up to 160 million AMD shares -- roughly 10% of the chip company -- for $0.01 each, as long as certain milestones for deploying the chips were met. In order for OpenAI to exercise all the warrants, AMD's share price had to cross above $600, which it did in September. Although OpenAI hasn't yet exercised the warrants, the charge reported by AMD for the September quarter was accounted for as a liability.

Write to Robbie Whelan at robbie.whelan@wsj.com

(END) Dow Jones Newswires

November 03, 2026 16:37 ET (21:37 GMT)