AMD Now Sees 2027 Revenue Growing More Than 80%, Over Twice Its Long-Term Model
CEO Lisa Su also said demand is higher than supply, and CFO Jean Hu guided fourth-quarter revenue to about $17 billion.
AMD expects revenue to grow more than 80% in 2027, CEO Dr. Lisa Su said on the chipmaker's third-quarter earnings call, which she called more than twice the long-term financial model the company laid out at its Financial Analyst Day last November. Su said customers have expanded their server-chip and AI-accelerator plans, and AMD has lined up more supply to meet them.
Demand ahead of supply
Su said visibility into 2027 has strengthened since last quarter, when AMD forecast server revenue growth of more than 70%. It now expects server revenue to double and data center AI revenue to grow faster than it projected 90 days ago. Data center should exceed 80% of total revenue next year, she said.
Asked by a Barclays analyst whether supply backs that forecast, Su was blunt: "demand is higher than supply." She said AMD is working with suppliers on wafers, substrates, advanced packaging and memory, and believes it can add capacity.
Su said the server growth comes mostly from more units and higher core counts, and less from price. Revenue in the third quarter rose 45% to $13.4 billion, and earnings per share on an adjusted basis rose 74% to $2.09.
A $17 billion fourth quarter
CFO Jean Hu guided fourth-quarter revenue to about $17 billion, plus or minus 3%. She expects data center to grow about 50% from the third quarter, and said data center AI will pass server revenue in size for the first time. Su said the fourth quarter is when that crossover happens.
Data center made up 64% of third-quarter revenue, Su said, up from 47% a year earlier. Hu put the prior-quarter share at 58%.
Hu said 2027 operating expenses should grow at less than half the rate of revenue, which she said would drive very significant operating margin expansion. She said the AI business is a little bit dilutive to corporate gross margin, and she could not give a quarter-by-quarter margin path for 2027.
PCs soften, warrants cost $1.1 billion
Su said PC sell-through slowed late in the quarter as higher memory and component costs weighed on demand. AMD is planning for PC unit shipments to fall by a double-digit percentage in 2027.
Under standard accounting, Hu said, diluted earnings per share were $1.46 because of a $1.1 billion non-cash charge in other income and expense tied to warrants issued to a customer. She expects that charge to grow as the agreement progresses. It is excluded from adjusted results and free cash flow.
Hu said the warrants will dilute the share count only once the customer's vesting and exercise conditions are met, and AMD will give guidance on that in 2027.
The fourth-quarter share count of about 1.67 billion, Hu said, is not expected to include any effect from customer warrants.
