Advanced Micro Devices (NASDAQ:AMD) shares climbed nearly 8% in premarket trading on Wednesday after the semiconductor company reported third-quarter earnings and revenue above Wall Street estimates and issued stronger-than-expected guidance for the final quarter of 2026.
The California-based chipmaker reported adjusted earnings of $2.09 per share on revenue of $13.38 billion for the third quarter, exceeding analysts’ expectations of $1.94 per share and $13.06 billion in revenue.
The results were supported by strong demand for data centre processors and artificial intelligence chips, with the company’s data centre division recording a sharp increase in sales.
AMD’s third-quarter performance exceeded market expectations on both profitability and revenue.
Adjusted earnings per share reached $2.09, compared with the analyst consensus of $1.94, representing an earnings beat of approximately 7.7%.
Revenue totalled $13.38 billion, surpassing the $13.06 billion forecast by approximately $320 million, or 2.5%.
The results reflected continued demand for AMD’s semiconductor products across its major markets, particularly the data centre business.
The company develops processors and graphics technologies used in personal computers, servers, gaming consoles and artificial intelligence applications.
Its expanding presence in AI infrastructure has become an increasingly important contributor to overall growth.
AMD’s data centre division delivered one of the strongest performances during the quarter, with revenue nearly doubling from the previous year to a record $8.55 billion.
The increase reflected growing demand for the company’s EPYC server processors and Instinct AI accelerators, which are used in high-performance computing and artificial intelligence infrastructure.
Chief Executive Officer Lisa Su said demand for both product families continued to strengthen as the company prepared to increase production of its latest technologies.
“Demand for our Instinct and EPYC products continued to strengthen, and we expect growth to accelerate further in the fourth quarter as we scale Helios and ‘Venice’ production. 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,” Su said.
The company has increasingly positioned its data centre business as its principal growth engine.
In August, Su identified data centres as AMD’s primary revenue driver, reflecting the rising importance of AI infrastructure spending to the company’s financial performance.
AMD also provided an optimistic outlook for the fourth quarter, forecasting revenue of approximately $17 billion, plus or minus 3%.
The midpoint of the guidance range implies year-over-year revenue growth of approximately 66% and a sequential increase of around 27%.
Wall Street analysts had expected fourth-quarter revenue of $16.23 billion.
The company’s forecast therefore exceeded consensus expectations by approximately $770 million at the midpoint.
The outlook reflects expectations of continued growth in demand for AI accelerators and server processors as AMD increases production of its Helios and Venice products.
The stronger guidance was a key factor behind the positive premarket reaction to the earnings announcement.
AMD has been strengthening its position in the artificial intelligence semiconductor market through major customer agreements and investments in advanced computing products.
Earlier this year, the company signed a six-gigawatt agreement with Meta Platforms (NASDAQ:META) to supply graphics processing units for the technology group’s AI infrastructure.
The agreement, valued at approximately $60 billion, supports Meta’s expansion of computing capacity for its Facebook and Instagram platforms and broader artificial intelligence operations.
The partnership represents an important opportunity for AMD to increase its presence in a market currently dominated by Nvidia (NASDAQ:NVDA).
Although Nvidia maintains a larger share of the high-performance AI graphics processor market, AMD has been expanding its product portfolio and pursuing additional business from major technology companies.
AMD shares have significantly outperformed both Nvidia and the broader US equity market during 2026, despite recent volatility in semiconductor stocks.
The company’s shares have more than doubled in value since the beginning of the year, compared with a 10.8% gain for Nvidia and a 10.6% increase in the S&P 500.
However, AMD experienced a substantial correction in October, with its shares declining 17.5% during the month.
The weakness reflected a broader retreat from artificial intelligence-related investments as investors questioned the scale of spending on AI infrastructure and the potential returns from those investments.
Concerns have also increased over the substantial debt being raised by technology companies to finance data centre construction and other AI-related projects.
The Philadelphia Semiconductor Index, a widely followed benchmark for chip stocks, declined 15.4% in October.
The sector-wide downturn affected major semiconductor companies, including AMD and Nvidia, as investors reassessed valuations and longer-term growth expectations.
Analysts at Baird pointed to AMD’s expanding position in the server processor market as an important factor supporting its longer-term outlook.
In a research note, the analysts said:
“Server CPU revenue guidance up >2x for 2027 highlights ongoing and significant share gains, with AMD well positioned from a wafer fungibility standpoint between clients and servers.”
The comments suggest that AMD could benefit from continued market share gains in server processors, alongside its growing AI accelerator business.
The analysts also highlighted the company’s ability to allocate semiconductor manufacturing capacity between client and server products, potentially providing flexibility as demand changes.
AMD’s third-quarter earnings and fourth-quarter revenue forecast indicate continued momentum in its data centre and artificial intelligence businesses.
The company’s ability to sustain growth will depend partly on the successful expansion of Helios and Venice production, continued demand for EPYC and Instinct products, and the execution of major customer agreements.
Investors will also be monitoring competition with Nvidia and broader concerns about the financial returns generated by large-scale AI infrastructure investment.
Despite October’s decline in semiconductor valuations, AMD’s stronger-than-expected results and guidance demonstrate continued demand for its products.
The company’s forecast of approximately $17 billion in fourth-quarter revenue provides a key benchmark for assessing its performance as it approaches 2027.
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