AMD reports 45% revenue growth, acquires World Labs for $8.2B

Quarterly performance beats expectations

Advanced Micro Devices Inc. (AMD) reported third-quarter revenue of $13.38 billion, a 45% year-over-year increase, surpassing Wall Street expectations. Net income rose 77% to $3.47 billion, while earnings per share reached $2.09, beating the consensus estimate of $1.95. The results drove AMD’s shares up 8% in extended trading, though gains later narrowed due to broader market movements, including election-related volatility.

Data center revenue drives growth

The company’s data center business was the standout performer, with revenue nearly doubling year-over-year. This segment now accounts for 64% of AMD’s total revenue, up from 47% a year ago. The growth reflects surging demand for AMD’s central processing units (CPUs) and rack-scale systems like Helios, which are increasingly used for agentic AI applications. Meta, Microsoft, Anthropic, OpenAI, and Oracle are among the companies deploying Helios in their data centers.

PC and gaming chip revenue declines

AMD’s personal computer and gaming chip segment struggled, with revenue declining 8% year-over-year to $3.7 billion. The drop aligns with broader industry trends, including a 4% decline in global PC shipments during the second quarter, as rising component costs dampened demand. However, the company’s overall performance was buoyed by its data center strength.

Growth outlook and supply chain expansion

CEO Lisa Su projected confidence in AMD’s future growth, forecasting that server revenue will double in fiscal 2027. She also expects AI demand to accelerate faster than previously anticipated, supported by strategic investments and supply chain expansions. During a recent visit to Taiwan, Su secured commitments from Taiwan Semiconductor Manufacturing Co. and other partners to increase AMD’s supply of wafers, substrates, and memory components for 2027.

$8.2 billion acquisition of World Labs

AMD announced an $8.2 billion all-stock acquisition of World Labs Inc., an AI startup founded by Fei-Fei Li. World Labs specializes in world models that simulate 3D environments, which could enhance AMD’s capabilities in robotics and physically grounded AI applications. The deal is expected to close in the coming months, pending regulatory approval.

Strategic investments and acquisitions

In addition to the acquisition, AMD committed $5 billion to Anthropic and $1 billion to Meta’s latest equity offering. These investments underscore AMD’s focus on strengthening partnerships with key players in the AI ecosystem. The company also acquired Taalas Inc., a startup developing specialized model-specific integrated circuits, and invested in Stability AI Ltd., which raised $76 million in August.

Fourth-quarter outlook

For the fourth quarter, AMD expects revenue of $17 billion, exceeding analyst estimates of $16.2 billion. The company projects gross margins of 55%, slightly below the Street’s forecast of 55.3%. The guidance reflects optimism about sustained demand for AI and data center solutions.

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