For most of the AI boom, AMD has been the talented sibling everyone introduces as "the alternative." Tuesday's earnings suggest it's tired of the label, and its biggest customers seem happy to help it shed it.
Beat, Raise, and a Very Long Customer List
AMD reported third-quarter revenue of $13.38 billion, up 45% year over year and ahead of the $13.09 billion analysts expected, with adjusted earnings of $2.09 a share against a $1.95 estimate. Data center revenue nearly doubled and now makes up 64% of AMD's total, up from 47% a year ago. The company guided to about $17 billion in fourth-quarter revenue, well above the $16.2 billion consensus, and the stock jumped 8% in extended trading.
The star of the show is Helios, AMD's full rack-scale system built to take on Nvidia's Grace Blackwell and Vera Rubin racks. According to CNBC, Meta, Microsoft, Anthropic, OpenAI and Oracle are starting to use Helios in their data centers, and Meta said last week that its racks are up and running. AMD's chief executive told analysts the company expects server revenue to double year over year in 2027.
Selling the Whole Rack, Not Just the Chip
The move to complete racks matters more than any single spec sheet. Hyperscalers want integrated systems they can roll into a data hall and switch on, and that has been one of Nvidia's biggest advantages. If AMD can deliver full racks at scale, the biggest buyers get a credible second supplier and real negotiating leverage, which counts for a lot when the bill runs to tens of billions.
The fine print is worth a look. AMD has committed to invest up to $5 billion in Anthropic and agreed to put $1 billion into Meta's equity offering, so some of the customers on that list are also companies AMD is funding. That's common in this boom, but it's not nothing. Not everything grew, either: the PC and gaming segment fell 8%, with gaming revenue down 40%. Still, the CEO's line that "adoption is just starting," with demand expected to climb as AI agents take on more complex work, is about as bullish as earnings calls get.
The AI chip race finally has a serious second runner, and the people signing the purchase orders are thrilled.
All those racks end up powering AI features inside everyday business software, so if you're figuring out where AI belongs on your own site or platform, let's talk it through.
Source: CNBC