In the third quarter, AMD achieved record-breaking revenue of $6.82 billion, marking an 18% year-over-year increase and slightly surpassing analysts’ forecast of $6.71 billion. Adjusted earnings per share (EPS) came in at $0.92, matching expectations. On Tuesday, AMD announced a Q4 revenue estimate of approximately $7.5 billion, marginally below analysts' consensus estimate of $7.55 billion.

According to AMD’s financial report, third-quarter capital expenditures stood at $132 million, up 6.5% YoY but down over 14% sequentially. For the first nine months of 2023, cumulative capital expenditures totaled $428 million, reflecting a 5.2% increase YoY.

Despite record-high total revenue and data center income for Q3, the midpoint of AMD’s Q4 revenue guidance slightly underperformed market expectations. Analysts suggest supply chain limitations could be preventing AMD from meeting high demand for AI chips. Following the earnings release, AMD's stock dipped nearly 7% in after-hours trading, though it had risen almost 4% earlier in the day. Year-to-date, AMD shares have climbed close to 13%, compared to a 25% gain for the NASDAQ index. Competitors Nvidia and Intel also saw modest after-hours declines.

source：uSMART SG

Key Financial Highlights

Quarterly Revenue: Achieved a record $6.82 billion, up 18% YoY and 17% QoQ. This exceeded the market expectation of $6.71 billion and was within AMD’s guidance range of $6.4 to $7 billion.

Gross Margin: GAAP gross margin rose to 50% from 47% YoY, and non-GAAP gross margin improved to 54% from 51%.

Operating Income: GAAP operating income rose sharply by 223% to $724 million, while non-GAAP operating income increased by 34% YoY and 36% QoQ to $1.72 billion.

Net Income: GAAP net income surged by 158% to $771 million, while non-GAAP net income grew by 33% YoY and 34% QoQ to $1.5 billion.

Diluted EPS: GAAP EPS of $0.47 increased by 161% YoY, while non-GAAP EPS of $0.92 grew by 31% YoY and 33% QoQ, in line with market expectations.

Q4 Outlook

Revenue: Expected to be between $7.2 billion and $7.8 billion, with a midpoint of $7.5 billion, representing approximately 22% YoY and 10% QoQ growth. Analysts projected $7.55 billion.

Non-GAAP Gross Margin: Expected around 54%.

Some analysts speculate that AMD's guidance reflects supply constraints rather than a weakening in AI demand, which remains strong. In July, TSMC, the world’s largest semiconductor foundry, warned of tight AI chip production capacity through 2025, indicating ongoing supply challenges for advanced semiconductors.

Earlier in October, AMD held its "Advancing AI" event, introducing its next-generation AI chip lineup. The company, however, did not update its annual sales forecast for the MI300 AI accelerator or announce additional major customer partnerships.

The newly launched MI300 accelerator is a critical growth driver, positioning AMD in direct competition with Nvidia. However, growth is impacted by supply constraints, as AMD, like many companies in the industry, no longer owns its manufacturing facilities and relies on outsourcing to TSMC.

AMD CEO Lisa Su commented, "Customer acceptance of AMD is very high; every customer gives us a fair shot, and we are working hard to win their business." She noted that AMD is accelerating production while gaining the trust of data center companies reliant on AI accelerators. Su also mentioned that while AMD has made progress in the supply chain, there remains a risk of supply pressure should demand exceed current projections. "We anticipate a tight market environment but expect significant growth by 2025, and we remain optimistic about supply chain capacity," she added.

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