AMD stock jumps 7% on earnings as data center revenue nearly doubles

Key points

• AMD reported third-quarter revenue up 45% and data center sales nearly doubling from a year earlier.
• The stock rose 7% in extended trading after results beat Wall Street expectations.
• AMD expects about $17 billion in fourth-quarter revenue, above the $16.2 billion analyst estimate.

Advanced Micro Devices reported third-quarter earnings on Tuesday that beat Wall Street's expectations, with revenue rising 45% and data center sales nearly doubling from a year earlier. The stock jumped 7% in extended trading.

The data center unit now accounts for 64% of AMD's overall revenue, up from 47% a year ago. AMD's report follows Intel's disclosure of similar data center growth, though Intel shares fell 29% on Friday over concerns about weak guidance and its ability to meet demand.

What the CEO said

CEO Lisa Su said in a press release that she expects growth in data center processors to "accelerate further," and that meeting demand won't be a problem. She said the company is confident in its ability to sustain strong revenue growth and expanding profitability over the coming years.

AMD said it expects about $17 billion in fourth-quarter revenue, beating the $16.2 billion average analyst estimate. It sees gross margin for the quarter at 55%, slightly below the 55.3% average estimate.

With our leadership product portfolio and deep customer and supply chain relationships, we are confident in our ability to sustain very strong revenue growth and expanding profitability over the coming years

— Lisa Su

PC and gaming weakness

AMD reports PC chip sales in a segment combined with gaming chips. Revenue in that business fell 8% from a year earlier to $3.7 billion, and gaming revenue was down 40%.

Global PC shipments declined 4% in the second quarter from a year earlier due to soaring costs for memory and other components, according to Counterpoint Research. AMD's stock is up about 125% this year.