Overview
Since the Report + 6.9%
Revenue grew 44.7% year over year, EPS beat the estimate by 7.2%; the stock rose 6.9% in its first reaction.
- RevenueQ3
- $13.38B
- Estimate $13.09B · Beat by 2.2%
- EPSAdjusted
- $2.09
- Estimate $1.95 · Beat by 7.2%
Verdict
BUYAMD beat the top end of its own guidance with $13.38 billion in revenue, as data center sales grew 97% year over year. The stock rose 6.9% after hours on a $17 billion outlook 4.4% above estimates and a 2027 growth target above 80%. The next things to watch are how Helios racks affect gross margin and the weaker free cash flow.
Close on Report DayNov 3
$483.90▲ 6.9%Report-Day Move
- Market Cap(Today)
- ≈ $844 B
- 1Y Return(At Report)
- + 86%
- P/E(At Today's Price · $6.65 · Trailing 12M)
- 77.8
- Net Margin(Trailing 12M)
- 15.6%
Earnings Summary
In 30 Seconds- Revenue of $13.38 billion beat estimates by 2.2%, and adjusted EPS of $2.09 beat by 7.2%.
- Fourth-quarter revenue guidance of $17 billion is 4.4% above estimates and implies 66% annual growth.
- Shares rose 6.9% after hours, and Lisa Su said on the call that 2027 revenue should grow more than 80%.
The Numbers
Data Center Revenue
$8.55B
▲ 97% Annual · 64% of Revenue
Adjusted Gross Margin
55.9%
54.0% a Year Ago · +1.9 Points Annual
Q4 Revenue Guidance
$17.0B
Estimate $16.29B · 4.4% Above
Stock Reaction
▲ 6.9%
After Hours · Post-Call 6:39 PM ET
Quarterly Revenue ($ Billion)
9.25
Q3 25 · $9.25 B
10.27
Q4 25 · $10.3 B · QoQ + 11.1%
10.25
Q1 26 · $10.3 B · QoQ − 0.2%
11.54
Q2 26 · $11.5 B · QoQ + 12.5%
13.38
Q3 26 · $13.4 B · QoQ + 16.0% · YoY + 44.7%
16.5–17.5
Q4 26E · 16.5–17.5 · QoQ + 27.1% · YoY + 65.5%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
- Q4 26E
Q4 2026 Company Guidance
- Revenue16.49 – 17.51 billion16.49 billion17.51 billion
Midpoint 17.0 · Market Expectation 16.294.4% Above Estimate ▲
- Gross Margin (Adjusted)55%
Q3 Actual 55.9% · 54.0% a Year Ago0.9 Point Contraction ▼
- Annual Revenue Growth66%
44.7% in Q3 · Estimate Implies 58.6%7.4 Points Above Estimate ▲
- 2027 Revenue Growth80%
Earnings Call · Floor, More Expected
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±13% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Data Center$8.55 BShare 63.9%▲ 96.9% YoY
- Client and Gaming$3.72 BShare 27.8%▼ 8.1% YoY
Client $2.95B, gaming $773M
- Embedded$1.11 BShare 8.3%▲ 29.4% YoY
Key Metrics
Free Cash Flow
$554 M
▼ 63.8% YoYPress Release
Adjusted EBITDA
$4.16 B
▲ 71.3% YoYPress Release
Inventory
$11.5 B
Press Release
Client Business Revenue
$2.95 B
▲ 7.2% YoYPress Release
Gaming Business Revenue
$773 M
▼ 40.4% YoYPress Release
Shares are computed over the segment total: $13.4 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“We now expect data center segment revenue growth to accelerate in the fourth quarter and full-year segment revenue to more than double from 2025. We now expect server revenue to double year-over-year in 2027 and data center AI revenue to grow even faster than we projected 90 days ago. We now expect revenue to grow more than 80% in 2027.”
- Above 80% Growth in 2027
- Server Revenue Doubling
- Demand Exceeds Supply
Summary and Review
Summary
Revenue came in at $13.38 billion, up 44.7% year over year. The market expected $13.09 billion, so the beat was 2.2%. Adjusted EPS of $2.09 topped the estimate by 7.2%. Fourth-quarter revenue guidance of $17 billion sits 4.4% above the $16.29 billion estimate. That means all three gates are open: revenue, earnings and guidance. The engine of growth is the data center segment, where revenue reached $8.55 billion.
The stock closed the regular session up 3.7% at $483.90. After the earnings call it traded at $517.40 after hours, a gain of 6.9%. In August the numbers were solid, yet the stock dropped about 9% after hours. This time the market read the quarter as an acceleration story. The guidance midpoint implies 66% annual growth, up from 44.7% in the third quarter. On the call, Lisa Su said she expects revenue to grow more than 80% in 2027.
The score is 84 and the view is buy. The reason is that all three measures beat estimates by more than 2%. Caveats pull the score down within its band. Free cash flow fell to $554 million from $1.53 billion a year ago. Inventory rose to $11.46 billion from $7.92 billion at the end of December. Adjusted gross margin guidance of 55% implies roughly 0.9 points of contraction from the third quarter.
Full Review
Data center nears two-thirds of revenue.
Data center revenue was $8.55 billion. Annual growth was 97%. The segment's share of total revenue rose from 47% to 64% in one year. Segment operating income reached $2.88 billion, up from $1.07 billion a year earlier. The operating margin climbed from 24.7% to 33.7%. EPYC processors and the newly launched Instinct MI450 series drove the gain. According to the company, Anthropic, Meta, Microsoft, OpenAI and Oracle are running models on the first Helios rack systems. The MI450 and Helios shipments listed as upcoming last quarter have now happened. The $4.2 billion annual increase in data center revenue is larger than the $4.13 billion increase in total revenue. The center of gravity of revenue now clearly sits in this segment. On the call, Su said she expects server revenue to double in 2027. She added that data center should exceed 80% of total revenue in 2027.
Flat margin, strong operating leverage.
Adjusted gross margin was 55.9%. It was 56.2% last quarter and 54.0% a year ago. That is 0.3 points lower sequentially and 1.9 points higher year over year. The real gain came on the cost side. Adjusted operating expenses were $3.56 billion, or 27% of revenue. A year ago that ratio was 30%. Adjusted operating margin rose from 24% to 29%. As a result, EPS grew 74% while revenue grew 44.7%. The company guides fourth-quarter gross margin to 55%. Rack systems limit margin in the early phase. On the call, CFO Jean Hu gave no quarterly margin path for 2027. The mix of data center AI and server sales will set the margin. Hu said 2027 operating expenses will grow at less than half the rate of revenue.
Client and gaming weakened.
The company reorganized its segments this quarter; client and gaming now form a single segment. That segment's revenue was $3.72 billion, down 8% year over year. Within it, the client business grew 7% to $2.95 billion. The gaming business fell to $773 million, a 40% decline. The company attributes this to lower semi-custom console chip and graphics card sales. Segment operating income was $573 million, versus $867 million a year earlier. The embedded segment grew 29% to $1.11 billion. On the call, Su said rising memory and component costs are weakening PC demand. The company assumes a double-digit decline in PC unit shipments in 2027. Combined revenue of the two non-data-center segments was $4.83 billion, down 1.5% year over year. Nearly all growth came from the data center.
Cash flow lagged earnings.
Free cash flow was $554 million. A year ago it was $1.53 billion, a 64% decline. Cash from continuing operations fell 33% to $1.20 billion. Inventory explains the gap: $3.0 billion went into inventory during the quarter. The inventory balance rose from $7.92 billion at the end of December to $11.46 billion. Capital expenditure was $648 million, versus $258 million a year ago. Total debt rose from $3.23 billion to $7.08 billion. GAAP EPS was $1.46. The change in fair value of warrants issued to customers cut GAAP earnings by $1.10 billion. Adjusted earnings exclude this item, which explains the wide gap between the two measures. Cash and short-term investments stood at $15.78 billion, so the balance sheet is not strained. Hu said investment in inventory and capacity will continue to support 2027 growth. For more, see the cash flow guide.
Next quarter, watch a single line.
Next quarter, watch a single line: adjusted gross margin. The company guides 55% margin on $17 billion in revenue. If revenue lands above $16.5 billion and margin holds at 55%, Helios growth is not diluting profits. If margin drops below 54%, rack systems are buying volume at the expense of profit. The second measure is inventory. If the $11.46 billion of inventory does not turn into revenue, the pressure on cash will last longer. Inventory grew by $3.0 billion this quarter; that build should stop in the fourth quarter. The third measure is gaming. If the console cycle has not bottomed, the client and gaming segment will keep shrinking. For a general framework, see the earnings day guide.
Looking Ahead
Strengths and Risks
6 Strengths · 6 RisksStrengths
6- Revenue beat the top end of the company's $12.7-13.3 billion guidance range.
- Data center revenue rose 97% year over year to $8.55 billion.
- Fourth-quarter revenue guidance of $17 billion is 4.4% above estimates.
- Adjusted operating margin rose from 24% to 29% in one year.
- Helios rack systems are now running at Anthropic, Meta, Microsoft, OpenAI and Oracle.
- The company expects 2027 revenue to grow more than 80%, with server revenue doubling.
Risks
6- Free cash flow fell 64% year over year to $554 million.
- Inventory has risen 45% since the end of December to $11.46 billion.
- Fourth-quarter gross margin guidance is 55%, and the company gave no quarterly margin path for 2027.
- Gaming revenue fell 40% year over year to $773 million.
- Fair value changes on customer warrants may keep weighing on GAAP earnings as the stock rises.
- Total debt rose from $3.23 billion to $7.08 billion in one quarter.
What to Watch
4- Q4 2026Production of Helios rack systems and 6th Gen EPYC 'Venice' is set to scale.
- Date not disclosed — the World Labs and Taalas acquisitions are expected to close.
- First half of 2027The first gigawatt of Anthropic's 2-gigawatt MI450 deal is expected to come online.
- Early February 2027Fourth-quarter earnings: the test of the $17 billion ±3% guidance.
Upcoming Earnings
To Understand This