Tech & AI
AMD Guides Fourth Quarter to About $17 Billion as Data-Centre Sales Nearly Double
The chipmaker beat estimates on AI demand, but booked a $1.07 billion charge tied to warrants granted to OpenAI and Meta.
HedgeWeekly Tech & AI Desk ·
Advanced Micro Devices reported record third-quarter revenue of about $13.4 billion on Tuesday, up roughly 45% from a year earlier and ahead of the $13.09 billion analysts expected. Adjusted earnings were $2.09 a share against a $1.95 estimate. Data-centre sales, the unit that sells AI processors and server chips, rose 97% to about $8.5 billion and made up around 64% of the total, compared with roughly 47% a year ago.
For the fourth quarter AMD guided to revenue of about $17 billion, give or take 3%, against a consensus near $16.2 billion; the midpoint implies about 66% annual growth. The company also said it expects faster-than-expected growth in 2027. Gaming revenue fell 40%, free cash flow dropped to $554 million from $1.53 billion, and inventories rose to $11.4 billion from $7.9 billion at the end of last year.
AMD took a non-cash charge of $1.07 billion, or 66 cents a share, in the quarter ended September 26 for warrants (rights to buy shares at a nominal price) issued to OpenAI and Meta. Meta's warrants, tied to an agreement to buy up to $60 billion of AMD AI chips over five years, could cover up to 10% of the company if milestones are met; OpenAI holds a similar option. Finance chief Jean Hu said dilution would start once vesting and exercise conditions are met, with more detail on timing due in 2027. Shares rose between about 6% and 8% in after-hours and premarket trading depending on the report; Intel, Nvidia and Broadcom also gained.
Why it matters: the guidance strengthens the case that AI spending is still accelerating, and it lifted the wider chip group after a pullback; AMD had fallen 25% from its October 6 high before the report. The counterweight is that AMD is paying for its biggest customers' loyalty with equity, so future earnings per share depend on how fast the warrants vest. Watch the pace of inventory build, the 2027 dilution guidance, and whether analysts' view that Nvidia's lead is intact holds as AMD's AI share grows.