Advanced Micro Devices (AMD) has reported its most profitable and largest quarter to date, driven by a surge in demand for data center hardware and artificial intelligence chips. For the third quarter of 2026, the company generated a record $13.4 billion in revenue, marking a 45% increase over the same period last year and surpassing Wall Street expectations.
The company's data center division was the primary driver of this growth, with revenue jumping 97% year over year to reach $8.5 billion. According to AMD, this growth was fueled by strong demand for Instinct AI graphics processors, including the MI450 series, and EPYC server processors. Major technology firms such as Anthropic, Meta, Microsoft, OpenAI, and Oracle are currently running workloads and models on AMD’s Helios AI systems, which combine the MI450 GPUs with sixth-generation EPYC processors.
AMD also noted that interest in "agentic AI"—systems capable of performing complex tasks with limited human involvement—is creating additional demand for processors and data center equipment.
The financial results highlight a significant shift in AMD's business model. Data center revenue accounted for approximately 64% of total sales in the third quarter of 2026, up from roughly 47% a year earlier. CEO Lisa Su expects this trend to persist, and according to Reuters, she anticipates overall revenue to grow by more than 80% in 2027, with data center products making up the majority of that increase. AMD management further expects the data center business to eventually contribute more than 80% of total company revenue beyond 2027.
Profitability also reached new heights during the quarter. AMD reported an adjusted net income of $3.5 billion, exceeding analyst expectations of approximately $3.2 billion. Adjusted earnings per share reached $2.09, a 74% increase from the previous year. On a reported basis, the company recorded $2.4 billion in net income with earnings per share of $1.46. The reported gross margin was 54%, while the adjusted gross margin stood at 56%.
In contrast to the data center success, AMD's consumer and gaming segments saw weaker demand. Combined Client and Gaming revenue fell 8% year over year to $3.7 billion. While PC processor revenue rose 7% to $2.9 billion due to Ryzen mobile processor sales, gaming revenue plummeted 40% to $773 million because of lower sales in graphics products and semi-custom chips. AMD warned that the wider PC market may face challenges in 2027 due to rising component and memory prices, predicting a double-digit percentage decline in global PC shipments next year, though the company believes it can outperform the market.
Looking ahead, AMD forecasts approximately $17 billion in revenue for the fourth quarter of 2026, with a possible variation of 3%. This midpoint represents approximately 66% growth compared to the same period last year and 27% growth compared to the third quarter. The company expects its adjusted gross margin to reach approximately 55%.
AMD is positioning itself against competitors like Nvidia and Intel by moving toward developing complete AI computing systems through its Helios platform. While AMD's data center growth reflects increased spending on AI, the company noted that memory supply shortages could pose challenges as it ramps up production of advanced AI hardware.
