Here's why AMD's stock is rising - and sending a confident message about the AI trade

By Britney Nguyen

The chip maker is showing 'real' revenue from AI, shrugging off sustainability concerns and leading to an upbeat forecast

CEO Lisa Su expects AMD's data-center business to show accelerating growth - and its PC business to outperform a sagging market.

Shares of Advanced Micro Devices were climbing in extended trading Tuesday as investors were encouraged by the company's third-quarter earnings results - especially against a tough recent trading backdrop for artificial-intelligence-related companies.

AMD (AMD) saw revenue come in at $13.4 billion for the September quarter, up 45% from a year ago and ahead of the $13.1 billion analysts tracked by FactSet had been looking for. Its adjusted earnings of $2.09 per share also topped estimates for $1.95 and represented growth of 74% year over year.

Much of that strength came from the company's data-center business, which saw revenue nearly double in the third quarter. AMD said customers are increasingly interested in both its graphics processing units and its server central processing units, which serve key roles in the AI ecosystem.

"There was plenty of skepticism around AI spending heading into the print, but AMD gave the market a reason to stay with the trade," Jake Behan, head of capital markets at ETF provider Direxion, said in emailed comments.

AMD shares were up more than 7% in Tuesday's extended trading, lifting other AI stocks as well. Shares of Arm Holdings (ARM), a designer of CPUs, were up more than 4%. Intel's stock (INTC) was up about 2%, as was Nvidia's (NVDA).

Server maker Super Micro Computer (SMCI) recorded upbeat results as well on Tuesday afternoon, delivering a further shot in the arm to the AI trade.

While analysts had been looking for $8.2 billion in data-center revenue from AMD, the company reported $8.5 billion - up 97% from a year ago. As production takes off for AMD's first-ever rack-scale solution, Helios, as well as the company's next-generation Venice CPUs, CEO Lisa Su said the data-center segment's growth is expected "to accelerate further" in the current quarter.

Emarketer analyst Jacob Bourne agreed that the chip maker's performance "will give investors encouragement" across the broader AI universe.

Chip stocks have had a rough stretch recently, as investors seek proof of returns on the massive investments being made in the AI buildout. But in Behan's view, AMD's report reflected ongoing demand for AI infrastructure and "real" revenue.

AMD also pleased Wall Street with elements of its forecast last week, including a projection that revenue from data-center GPUs could surpass revenue from server CPUs in the fourth quarter. The company expects total revenue of $17 billion in the fourth quarter, versus the $16.3 billion consensus analyst view.

What's more, AMD is targeting 80% revenue growth for the overall business next year, while analysts tracked by FactSet had been modeling about 77% growth.

Su said that the company had "very good visibility" into land, power and other areas that could otherwise keep customers from deploying AMD chips in accordance with their plans.

AMD also seems to be weathering the weak personal-computer market better than key rival Intel, which saw its shares fall 29% in the session following its earnings report last week, wiping out $140 billion in market capitalization. Intel's outlook for the December quarter came in below Wall Street's expectations, partly due to its struggles against a tough market for personal computers. It also reported a revenue miss for its client-computing group, which includes PC chips.

AMD, too, came up short of expectations for its PC business, though its $2.9 billion in client-computing revenue was only slightly below the $3 billion analyst consensus on FactSet.

Su said on the earnings call that AMD expects to outperform the broader PC market in the near future. The company will specifically target the enterprise and premium markets, where it believes it can add the most value for customers.

-Britney Nguyen

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11-03-26 1917ET