AMD Projects Rapid Revenue Acceleration in Fourth Quarter

AI server chip designer Advanced Micro Devices said Tuesday that revenue in the current quarter would rise about 65% year over year, or 20 percentage points faster than revenue grew in the third quarter. The company also projected that its gross margin would tick up 1 percentage point in the fourth quarter compared to the third quarter.

The AMD result took on more significance after investors last week became skittish over the rising capital expenditures of AMD’s and Nvidia’s biggest customers: major cloud providers.

AMD’s projected revenue acceleration overshadowed the fact that revenue rose 5 percentage points slower in the third quarter than in the second quarter, and free cash flows in the third quarter fell two-thirds to $600 million, as capital expenditures more than doubled. AMD shares rose more than 8% in after-hours trading.

The AMD server chip business nearly doubled in Q3, making up nearly two-thirds of AMD’s $13.4 in total revenue.

While Nvidia is generating at least seven times more revenue and is growing much faster than AMD, Nvidia shares were up less than 10% this year while AMD shares were up 116% before the end of normal trading Tuesday. AMD shares are pricier in comparison, trading at nearly 37 times earnings expected in the next 12 months, compared to 14 times for Nvidia shares.

In addition to major cloud providers, AMD counts OpenAI, Meta and Anthropic as current customers or users of its chips, including its full-rack product.