AMD Notes ‘Sharp’ Sales Jump For CPUs And Instinct GPUs As OpenAI Ties Deepen

‘Our data center AI, server, and PC businesses are each entering periods of strong growth, led by an expanding [total addressable market], accelerating adoption of our Instinct platforms and EPYC and Ryzen CPU share gains,’ AMD CEO Lisa Su says.

AMD said Tuesday that a “sharp” jump in sales for the company’s CPUs across the PC and server segments as well as its Instinct data center GPUs allowed it to deliver record revenue of $9.2 billion for the third quarter as it teased deeper ties with OpenAI.

With quarterly revenue representing a 36 percent increase year over year and a 20 percent sequential increase, AMD CEO Lisa Su called the “record” third-quarter results and “strong” fourth-quarter outlook a reflection of the chip designer’s “significant momentum building across our business” in its earnings call.

“Our data center AI, server, and PC businesses are each entering periods of strong growth, led by an expanding [total addressable market], accelerating adoption of our Instinct platforms and EPYC and Ryzen CPU share gains,” she said.

For the three-month period, which ended in late September, AMD reported a GAAP gross profit of $4.8 billion, up 40 percent year over year and up 56 percent sequentially, as well as a GAAP gross margin of 52 percent, up 2 points year over year and up 12 points year over year.

The company’s GAAP net income for the quarter was $1.2 billion, up 61 percent year over year and up 43 percent sequentially. Its GAAP earnings per share was 75 cents.

AMD beat Wall Street’s expectations on revenue by $500 million and on non-GAAP earnings per share by 3 cents with a reported $1.20 earnings per share.

The chip designer expects fourth-quarter revenue to reach roughly $9.6 billion, plus or minus $300 million. This would represent a 25 percent year-over-year increase and 4 percent growth sequentially at the midpoint of its guidance.

The quarterly revenue forecast came within the average estimate by Wall Street analysts but was below the high-end estimate of $9.8 billion, according to Yahoo Finance.

AMD’s stock price was down more than 3.5 percent in after-hours trading.

AMD’s Ties With OpenAI Deepen Amid Instinct Momentum

The company’s data center business grew 22 percent year over year to a record $4.3 billion, driven by “strong demand” for its fifth-generation EPYC processors as well as a “sharp” sales ramp of its Instinct MI350 GPUs and “broader” MI300 GPU deployments.

On the Instinct side, Su said the company has “multiple” MI350 series deployments “underway with large cloud and AI providers, with additional large-scale rollouts on track to ramp over the coming quarters.”

The cloud companies buying MI350 GPUs include Oracle as well as several smaller providers such as Crusoe, Digital Ocean, Tensorwave and Vultr.

Su also cited IBM, Zyphra, Cohere, Character AI and Luma AI as companies that are using the MI300 series for training or inference workloads.

As for AMD’s next-generation MI400 series, Su said development of the GPUs as well as the Helios rack-scale platform they will power “is progressing rapidly.”

She added that the products are supported by “deep technical engagements across a growing set of hyperscalers, AI companies and OEM and ODM partners to enable large-scale deployments next year.”

Among those companies is OpenAI, which announced last month a multi-year agreement with AMD to deploy six gigawatts of Instinct GPUs starting in the second half of next year.

Echoing comments Su made when the deal was disclosed, she said the partnership will “significantly accelerate” AMD’s data center AI business, adding that it could allow the company to bring in “over $100 billion in revenue over the next few years.”

“Moving forward, AMD and OpenAI will work even more closely on future hardware, software, networking and system-level roadmaps and technologies,” Su said.

She also reaffirmed her recent outlook that the company is “on a clear trajectory” to make tens of billions in annual revenue in 2027 from rack-scale solutions like Helios.

Su Says Cloud AI Buildout Is ‘Powerful New Catalyst’ For EPYC

As for the other major driver of AMD’s data center business, Su said server CPU revenue “reached an all-time high” thanks to rapid adoption of its fifth-gen EPYC processors, which made up nearly half of all EPYC revenue for the quarter.

“Sales of our prior generation EPYC processors were also very robust in the quarter, reflecting their strong competitive positioning across a wide range of workloads,” she said.

The company saw “record sales” in the cloud infrastructure market from hyperscalers deploying EPYC for both first-party services and public cloud offerings, with more than 160 EPYC-powered instances launched in the quarter, according to Su.

This brought the total number of public EPYC cloud instances to more than 1,350, nearly 50 percent higher than it was a year ago, she added.

Further reinforcing AMD’s strength in the cloud, Su said large businesses increased their adoption of EPYC cloud instances by more than three-fold year over year, with on-premises usages “driving increased demand from enterprise customers.”

AMD expects server CPU demand to “remain very strong as hyperscalers are significantly increasing their general-purpose compute capacity as they scale their AI workloads,” Su said.

“Many customers are now planning substantially larger CPU buildouts over the coming quarters to support increased demands from AI, serving as a powerful new catalyst for our server business,” she added.

As for on-premises customers, the company has seen a sharp increase in EPYC server sell-through compared to a year ago thanks to “accelerating enterprise adoption,” supported by more than 150 fifth-gen EPYC platforms on the market from a variety of OEMs, Su said.

AMD notched “large” new EPYC customer deals with “leading” Fortune 500 companies across several verticals, including telecom, financial services, retail and automotive, she added.

Su said the company’s next-generation, 2-nanometer EPYC “Venice” processors remain on track to launch next year, calling customer pull and engagement for the product line “the strongest we have seen.” This, according to her, reflects AMD’s “competitive positioning and the growing demand for more data center compute.”

“Multiple cloud and OEM partners have already brought their first Venice platforms online, setting the stage for broad solution availability and cloud deployments at launch,” she said.

Su Sees ‘Significant Opportunity’ In PCs With Sustained Ryzen Growth

AMD’s client PC and gaming segment grew 73 percent year over year to $4 billion, with client revenue alone generating a record $2.8 billion, up 46 percent from the same period last year thanks to “record sales of Ryzen processors and a richer product mix.”

Gaming revenue, on the other hand, grew 181 percent year over year to $1.3 billion, thanks to “higher semi-custom revenue” driven by Microsoft’s and Sony’s video game consoles as well as “strong demand” for the company’s Radeon gaming GPUs.

Desktop CPU sales alone “reached an all-time high, with record channel sell-in and sell-out led by robust demand” for the company’s Ryzen 9000 processors,” Su said.

The CEO also cited a sharp increase in OEM sell-through of Ryzen-powered laptops, saying that it reflected “sustained end customer pull for premium gaming and commercial AMD PCs.”

In the commercial segment alone, AMD saw Ryzen PC sell-through grow more than 30 percent year over year, with enterprise adoption growing “sharply” thanks to “large wins with Fortune 500 companies across healthcare, financial services, manufacturing, automotive, and pharmaceuticals,” according to Su.

“Looking ahead, we see significant opportunity to continue growing our client business faster than the overall PC market based on the strength of our Ryzen portfolio, broader platform coverage, and expanded go-to-market investments,” she said.

The comment about expanded go-to-market investments was a reference to the more than 40 percent boost the company made to partner funding this year as part of its restructured commercial partner program, AMD Partner Network, which launched last month.

AMD’s only weak spot was the embedded segment, which declined 8 percent year over year to $857 million. However, Su indicated that the market is improving.

“Design momentum remains very strong across our embedded portfolio,” she said. “We are on track for a second straight year of record design wins, already totaling more than $14 billion year-to-date, reflecting the growing adoption of our leadership products across a broad range of markets and expanding set of applications.”