AMD's Q3 Earnings Surpass Expectations; Stock Drops Amid Moderate Q4 Guidance

Unfavorable response to Q4 outlook despite Q3 earnings beat; PC and server processor sales show strong performance, gaming sales decline.

AMD's Q3 earnings surpassed expectations with revenue coming in at $5.8 billion, implying a 4% YoY increase and strong performance from PC and server processor sales, particularly the Ryzen 7000 series and the EPYC CPU portfolio.
Despite beating Q3 expectations, AMD shares fell due to lukewarm Q4 guidance of about $6.1 billion, in line with estimates. This potentially instigated an unfavorable reaction from investors who were possibly expecting a more optimistic projection.
The company's Q3 earnings saw a rise in PC processor sales with the Client segment touching $1.5 billion, marking a 42% YoY hike and a 46% sequential surge. However, Gaming segment revenue dropped by 8% YoY and 5% sequentially due to a decrease in semicustom revenue.
AMD plans to expand its operations in Data Center and Client segments in the fourth quarter, offset by lower sales projections in the Gaming segment and additional weakening of demand in the embedded markets.
AMD is set to begin shipments of its in-house AI accelerated processing units, MI300X and MI300A, positioning it for potential growth in the AI sector. This also aligns with CEO Lisa Su's comments on the company's data center business being on a significant growth trajectory.