AMD forecast eases AI spending fears as data-center sales surge
FILE PHOTO: An Advanced Micro Devices (AMD) MI350 series artificial intelligence chip is displayed at the San Jose McEnery Convention Center, in San Jose, California, U.S., June 12, 2025. REUTERS/Max A. Cherney/File Photo
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Nov 3 : AMD forecast faster-than-expected 2027 growth as its data-center sales surge and its multibillion-dollar challenge to Nvidia gathers pace, sending its shares up 8 per cent in extended trading.
The forecast and market-beating third-quarter results offered a strong counterpoint on Tuesday to mounting fears that the AI boom is losing steam and soothed investor concerns after rival Intel issued a weak outlook last week.
Intel’s shares rose 2 per cent, Nvidia stock climbed over 1 per cent and Broadcom also advanced 1.2 per cent.
On a conference call with analysts, AMD CEO Lisa Su said the company expects overall revenue to rise more than 80 per cent in 2027. Su’s forecast is higher than the 77 per cent growth analysts estimate, according to LSEG data.
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Su told analysts that 80 per cent of sales next year will come from data-center chips that will “drive the majority of our revenue and earnings growth.”
“We see demand across the data-center business, across our CPU business, as well as our data-center AI business,” Su said. “And when you look at the rate and pace of that growth, we’ve been planning for it for the last several years.”
Data-center revenue jumped 97 per cent to a record $8.55 billion in the third quarter, exceeding estimates of $8.20 billion.
The company expects fourth-quarter revenue of about $17 billion, plus or minus 3 per cent, above analysts’ average estimate of $16.23 billion, according to data compiled by LSEG.
AMD’s line of chips is positioned to benefit from the massive AI data-center buildout, portfolio manager at Gabelli Funds Hendi Susanto said.
“The stock’s resilience despite broader pressure on AI-related names suggests investors see AMD’s results as confirming its technology leadership and its strong position to keep gaining market share,” he added.
AMD is benefiting as a shift in AI workloads toward running models in real-world applications drives demand for its graphics processing units and central processors.
“The AMD numbers provide a greatly needed boost both for AI infrastructure and even, to a smaller degree, the PC market,” chief analyst at TECHnalysis Research Bob O’Donnell said.
The company’s adjusted gross margin is expected to be about 55 per cent, in line with estimates of 55.27 per cent and down from 56 per cent in the third quarter.
RAMPING UP AI ROLLOUTS
AMD has stepped up AI product rollouts, moving beyond standalone chips to compete with Nvidia’s rack-scale systems.
The company’s flagship Helios rack, combining its MI455X accelerator and new “Venice” server chips, is in production and set for a larger ramp-up in the fourth quarter. The initial systems are being tested at Meta.
AMD’s third-quarter revenue rose 45 per cent to $13.38 billion, beating estimates of $13.09 billion.
Adjusted profit came in at $2.09 per share, compared with estimates of $1.95.
The semiconductor industry is also grappling with a global memory shortage, leaving expensive high-bandwidth memory used in AI processors in scarce supply as manufacturers race to increase production.
Third-quarter sales in AMD’s client and gaming segment, home to its PC chips and console processors, fell 8 per cent to $3.72 billion, missing estimates of $3.79 billion.
AMD said it expects PC unit shipments to decline by a double-digit percentage next year, though Su said the company would “outperform the market.”
Last week, Intel forecast its chip revenue to decline in the mid-20 per cent range for its fourth quarter and the slowdown would last into 2027.
Source: Reuters
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