Recently, AMD announced its third-quarter financial report, which exceeded Wall Street expectations. However, the catch is that the company's gross profit margin estimates were in line with market expectations, causing the stock price to fall by nearly 5% in after-hours trading.

Performance Highlights

Earnings per share: $1.20 (adjusted), exceeding market expectations of $1.16.

Revenue: US$9.25 billion, far exceeding market expectations of US$8.74 billion, a year-on-year increase of 36%.

Net profit: reached US$1.24 billion, or 75 cents per share, a significant increase from US$771 million (47 cents per share) in the same period last year.

AMD’s outlook for the fourth fiscal quarter is also relatively optimistic, with revenue expected to reach US$9.6 billion, an increase of about 25%, higher than market expectations of US$9.15 billion. The company also expects adjusted gross margin to be 54.5%, in line with the market.

However, AMD CEO Lisa Su pointed out in the earnings call that this forecast does not include revenue from shipments of its Instinct MI308 chips to China. She said that AMD has obtained licenses for some MI308 chips and thanked the government for supporting the issuance of these licenses. AMD is still working with customers to assess needs and future opportunities.

New developments in the field of AI

As a key company competing with Nvidia in the artificial intelligence processor market, AMD recently reached a cooperation agreement with OpenAI. OpenAI will obtain approximately 10% of AMD's equity and will deploy 6 gigawatts of AMD Instinct graphics processing units (GPUs) in the next few years. This marks OpenAI’s further layout in AI hardware and further reflects AMD’s business growth potential in the AI ​​field.

AMD expects that this cooperation will significantly accelerate its data center AI business and is expected to bring high revenue in the next few years. The company also expects annual revenue from its AI business to reach tens of billions of dollars by 2027.

Strong growth in data center and gaming businesses

In terms of data center business, AMD’s revenue reached US$4.34 billion, a year-on-year increase of 22%. This business includes CPUs and GPUs. Among them, consumer business revenue was US$2.75 billion, a year-on-year increase of 46%, which also exceeded market expectations. Gaming business revenue reached $1.3 billion, a year-on-year increase of 181%, mainly due to Microsoft and Sony accelerating the production of Xbox and PlayStation video game consoles before the holiday season, which promoted the growth of AMD's semi-custom chip revenue.

In addition, Amazon, as an important cloud customer of AMD, recently disclosed that it had sold all AMD stocks it held before September 30, about 822,000 shares.

Summary

While AMD's strong growth in its AI and data center businesses drove results, gross margin guidance in line with market expectations caused the stock price to fall in after-hours trading. However, AMD's long-term growth potential remains strong as the AI ​​market continues to expand, especially with strategic collaborations with partners such as OpenAI and Oracle.

AMD’s success is closely related to its continuous expansion in the field of AI. In the next few years, AMD may usher in more opportunities in the fields of data centers, AI processors and game hardware. As global demand for AI and cloud computing continues to increase, AMD is expected to continue to occupy an important position in the technology industry.