AMD Q3 2025 Earnings
Strong Results Meet High Expectations
Earnings Summary
AMD delivered a record-breaking third quarter with revenue of $9.25 billion (up 36% year-over-year) and non-GAAP EPS of $1.20 (up 30% year-over-year), comfortably beating Wall Street’s expectations of $8.74 billion in revenue and $1.17 EPS. AMD also reported FCF was up 208% YoY, generating a record $1.53 billion.
See the Non-GAAP P&L from their Investor Presentation below:
See the performance breakout by segment below:
Data Center: $4.34 billion (up 22% YoY), driven by strong demand for 5th Gen AMD EPYC processors and Instinct MI350 Series GPUs
Client and Gaming: $4.05 billion (up 73% YoY)
Client revenue hit a record $2.75 billion (up 46% YoY)
Gaming revenue surged to $1.30 billion (up 181% YoY) on higher semi-custom and Radeon GPU sales
Embedded: $857 million (down 8% YoY), as expected in a normalizing demand environment
AMD guided Q4 revenue to ~$9.6 billion (±$300 million), representing 25% YoY and 4% QoQ growth. This handily exceeded the Wall Street consensus of around $9.15-9.21 billion. The company also projected non-GAAP gross margins of 54.5%.
Despite these impressive results and optimistic Q4 guidance, AMD shares tumbled approximately 4% in after-hours trading, trading around ~$240…
*Note: AMD’s guidance excludes any revenue from MI308 GPU shipments to China
After Hours Selloff
These earnings looks pretty good right? You’d be correct… and this clearly illustrates market disconnect between strong fundamentals and expectations.
Investors have been hyper-fixated on data center growth being the core foundation of AMD’s growth roadmap to achieving its AI ambitions against industry titan Nvidia. Analysts repeatedly pressed Jean Hu (CFO) and Lisa Su (CEO) on AI GPU growth and when the business will see this materially accelerate.
Management gave a conservative answer to this, mentioning that customer adoption should ramp similar to the EPYC CPU trajectory over time.
The CPU business has been ramping significantly faster YoY, which illustrates management also believes the GPU business is in its early stages… tell us something we don’t know… I know…
So, GPU growth was very strong YoY and QoQ, but the results didn’t live up to the “priced-to-perfection” expectations that the market requires currently to send up share prices.
Amazon also sold 100% of their shares of AMD, which helped force the stock price down after earnings.
The reason Amazon sold these shares is primarily because Amazon inked a $38 billion deal with OpenAI to supply NVIDIA GPUs through Amazon Web Services (AWS). This happened almost simultaneously with Amazon selling their shares.
This substantial deal shows that AWS is doubling down on the NVIDIA AI ecosystem and holdings AMD shares would be counter intuitive to their long-term partnership with the $5 trillion market leader.
Key Highlights
A couple of the biggest highlights from this earnings report were Lisa Su’s comments on the revenue outlook, compute capacity and market size.
“Our multi-year deployment agreement with OpenAI, involving 6 gigawatts of Instinct GPUs, is expected to contribute over $100 billion in revenue over the coming years.
Annual AI-related revenue for AMD is expected to reach the tens of billions by 2027 as these deployments scale.”
This signals Lisa’s confidence in the OpenAI partnership and ability of the organization to capitalize on their strategic roadmap to becoming an AI giant.
“We have the capacity to serve multiple hyperscaler-size customers simultaneously. Our data center AI infrastructure is designed to scale across numerous large cloud and AI providers, and with our current partnerships and deployments, we are demonstrating this capability successfully”
This statement gives confidence in AMD’s ability to meet the demand from several large-scale cloud and AI customers concurrently — capacity while scaling is not an issue.
“What I can tell you based on everything that we see today is that the AI market size will be exceeding $500 billion by 2028. This is substantially larger than our initial estimates, reflecting the rapid acceleration in AI adoption and the increasing demand for AI infrastructure driven primarily by inferencing workloads.”
This is a huge statement… and Lisa never jumps over her skis. This highlights the massive potential revenue pool ahead for AMD.
Takeaway
Our thesis remains clear.
Management’s direct emphasis on capacity to serve multiple hyperscale clients and the scale of the AI market opportunity echoes the core pillars of our original thesis.
AMD is strategically poised to be a formidable leader in AI infrastructure alongside its powerful CPU franchise.
This post-earnings dip may prove to be a buying opportunity rather than a warning sign.
Our full AMD Deep Dive can be referenced here.
See the following link to review the results in more detail for yourself —> Link
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