AMD forecasts fourth-quarter revenue above estimates on strong AI chip demand

Core Viewpoint - Advanced Micro Devices (AMD) forecasts fourth-quarter revenue exceeding market estimates, driven by the expansion of data center infrastructure and increased demand for AI chips [1][2]. Financial Performance - AMD expects fourth-quarter revenue of approximately $9.6 billion, with a variance of $300 million, surpassing analysts' average estimate of $9.15 billion [3]. - The company reported third-quarter sales of $9.25 billion, exceeding analysts' average estimate of $8.74 billion [4]. Market Dynamics - AMD's data center segment, which includes AI chips, saw a revenue increase of 22% to $4.3 billion in the September quarter, outperforming estimates of $4.09 billion [5]. - The client segment, catering to the personal computer market, experienced a 46% revenue increase to $2.8 billion in the third quarter [6]. Investment Trends - Significant investments in AI hardware have been made by companies like OpenAI and the U.S. Department of Energy, indicating continued spending on advanced processors [2]. - Major tech companies are heavily investing in AI hardware, with a notable portion directed towards chips, benefiting suppliers like AMD [5]. Competitive Landscape - AMD is gaining market share in the server CPU market against Intel, driven by the increased demand for server CPUs alongside AI GPUs [6]. - Microsoft reported a record capital expenditure of nearly $35 billion for its fiscal first quarter, with approximately half allocated to chips, highlighting the strong demand for AMD's products [5].