AMD sales forecast tops estimates on soaring AI chip demand
Fourth-quarter revenue will be US$17 billion (S$21.7 billion), plus or minus 3%.
Advanced Micro Devices (AMD), a formidable competitor to Nvidia in the artificial intelligence chip market, has issued a revenue forecast that surpassed analysts' predictions, highlighting the enduring robustness of demand for data centre processors. The semiconductor manufacturer announced on November 3 that its fourth-quarter revenue will amount to US$17 billion (S$21.7 billion), give or take 3%, compared to an average estimate of US$16.3 billion set by analysts.
This forecast serves as additional proof that AI spending is sustainable, potentially providing reassurance to nervous investors. Stock prices of chipmakers and other technology firms have been suffering in recent weeks due to apprehensions about an artificial intelligence infrastructure industry bubble. Since Lisa Su took the helm as CEO, AMD has emerged as one of the most significant suppliers of processors and computers that form the backbone of AI facilities, fuelling a surge in new services.
CFO Jean Hu stated in the company's statement that the fourth-quarter outlook reflects a surge in revenue and earnings, fueled by robust demand across AMD's data centre portfolio. Following the release of the report, AMD shares experienced a 6% increase in late trading. Despite recent volatility, the stock has more than doubled in 2026 and reached a valuation of US$1 trillion in September, placing it in a select group.
The surge in data centre growth has enabled AMD to counterbalance a decline in the personal computer market, where escalating memory-chip costs have slowed production and dampened user demand. Intel, AMD's premier rival in that sector, experienced its steepest stock decline in decades following a disappointing earnings report last week.
One potential vulnerability for AMD is a projected narrowing of its gross margin to around 55% in the fourth quarter, down from 56% in the prior period. AMD's third-quarter sales surged by 45% to US$13.4 billion, with profit rising to US$2.09 a share, excluding certain items. Analysts had expected revenue of US$13.1 billion and earnings of US$1.97 a share.
While AMD continues to deliver record results and now boasts sales twice as large as they were two years ago, it remains considerably behind Nvidia in terms of AI accelerators, which are utilized to train and execute artificial intelligence models. AMD's data centre business nearly doubled in sales, reaching US$8.5 billion, exceeding analysts' prediction of US$8.2 billion.
PC and gaming-related sales declined by 8% to US$3.7 billion. Like other manufacturers of PC components, AMD is grappling with a consequence of the data centre boom. AI servers demand vast quantities of memory, which has constrained the availability of chips for laptops and desktop machines, leading to higher prices. AMD is set to launch new product lines in both the CPU and accelerator markets.
The Santa Clara, California-based firm is also challenging Nvidia head-on with its Helios server design. However, Nvidia, the largest chipmaker and the world's most valuable company, has not remained idle. It is rapidly updating its product lineup and expanding into areas such as software, networking, and complete computers.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
