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ADVANCED MICRO DEVICES INC (AMD)·Q3 2025 Earnings Summary

Executive Summary

  • Record revenue and profitability: revenue $9.25B (+36% y/y, +20% q/q), GAAP gross margin 52% and non-GAAP EPS $1.20, with strength across EPYC CPUs, Instinct GPUs, and Ryzen; no MI308 revenue to China included .
  • Broad-based beat vs S&P Global consensus: revenue $9.25B vs $8.75B*, non-GAAP EPS $1.20 vs $1.17*; implied beat across the P&L driven by Data Center and Client/Gaming .
  • Q4 guidance raised vs Q3: revenue ~$9.6B ±$300M and non-GAAP GM ~54.5%; segment outlooks call for double-digit sequential growth in Data Center, Embedded up double digits, Client up but Gaming down strong double digits .
  • Strategic catalysts: OpenAI multi-gigawatt Instinct partnership (up to 6 GW; first 1 GW MI450 in 2H26) and Helios rack-scale AI systems positioning AMD for large-scale deployments and TAM expansion .

What Went Well and What Went Wrong

  • What Went Well

    • Record quarter: “We delivered an outstanding quarter, with record revenue and profitability... expanding compute franchise and rapidly scaling data center AI business” — Dr. Lisa Su .
    • Data Center and Client/Gaming strength: Data Center revenue $4.3B (+22% y/y; ramp of MI350; record EPYC), Client $2.8B (+46% y/y), Gaming $1.3B (+181% y/y) .
    • Cash generation: Record free cash flow $1.53B and strong cash/short-term investments of $7.24B .

  • What Went Wrong

    • Embedded softness: Embedded revenue $857M (−8% y/y); segment operating income margin compression y/y .
    • Year-ago export control overhang: Q2 included ~$800M charges tied to MI308 export restrictions; Q3 included no MI308 revenue; China remains uncertain .
    • Data Center margin mix: Data Center operating income $1.1B (25% of segment revenue) vs 29% y/y, reflecting higher R&D investment for AI opportunities .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$7.44 $7.69 $9.25
GAAP Gross Margin (%)50% 40% 52%
Non-GAAP Gross Margin (%)54% 43% (54% excl. $800M charge) 54%
GAAP Operating Margin (%)11% −2% 14%
Non-GAAP Operating Margin (%)24% 12% 24%
GAAP Diluted EPS ($)$0.44 $0.54 $0.75
Non-GAAP Diluted EPS ($)$0.96 $0.48 $1.20
Adjusted EBITDA ($USD Billions)$1.95 $1.09 $2.43
Free Cash Flow ($USD Billions)$0.73 $1.18 $1.53

Segment breakdown (Revenue):

Segment ($USD Billions)Q3 2024Q2 2025Q3 2025
Data Center$3.55 $3.24 $4.34
Client$1.88 $2.50 $2.75
Gaming$0.46 $1.12 $1.30
Embedded$0.93 $0.82 $0.86
Total$6.82 $7.69 $9.25

Consensus vs Actual (S&P Global):

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD Billions)$7.12*$7.43*$8.75*
Revenue Actual ($USD Billions)$7.44 $7.69 $9.25
Primary EPS Consensus Mean ($)$0.934*$0.483*$1.171*
Non-GAAP Diluted EPS Actual ($)$0.96 $0.48 $1.20

KPIs and Balance Sheet:

KPI ($USD Billions unless noted)Q1 2025Q2 2025Q3 2025
Cash + ST Investments$7.31 $5.87 $7.24
Total Debt$4.16 $3.22 $3.22
Capital Expenditures ($B)$0.21 $0.28 $0.26

Note: *Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025~$8.7B ±$0.3B; Non-GAAP GM ~54%; excludes MI308 China N/A (actuals reported $9.25B) Maintained (actuals exceeded)
RevenueQ4 2025N/A~$9.6B ±$0.3B; y/y +25%; q/q +4%; excludes MI308 China Initiated
Non-GAAP Gross MarginQ4 2025N/A~54.5% Initiated
Non-GAAP OpExQ4 2025N/A~$2.8B Initiated
Net Interest & OtherQ4 2025N/A~+$37M gain Initiated
Non-GAAP Effective Tax RateQ4 2025N/A~13% Initiated
Diluted SharesQ4 2025N/A~1.65B Initiated
Segment OutlooksQ4 2025N/AData Center: up double digits; Client: up; Gaming: down strong double digits; Embedded: up double digits Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
AI Accelerators ramp (Instinct)Q1: MI300 ramp underpinned Data Center (+57% y/y) ; Q2: MI350 series announced; export controls impacted MI308 MI350 ramp drove sequential Data Center growth; Helios/MI450 details; OpenAI 6 GW partnership Accelerating
EPYC server CPU demandQ1: Broad growth; cloud and enterprise adoption ; Q2: strong EPYC demand offset MI308 headwinds Record EPYC with Turin ramp; hyperscalers planning larger CPU buildouts into 2026 Strengthening
ROCm software ecosystemQ1: Day-zero support for frontier models ; Q2: ROCm 7 platform announced ROCm 7 launched, performance + up to 4.6x inference and 3x training vs ROCm6; broad community contributions Improving
Export controls / ChinaQ2: ~$800M inventory-related charges tied to MI308 ; Q2 guide excluded MI308 Q3: no MI308 revenue; licenses received but demand visibility remains dynamic Uncertain but improving licensing
Helios rack-scale systemsQ2: Helios unveiled Strong customer interest post-OCP; Sanmina manufacturing partnership; early MI450 customers favor rack-scale Building momentum
Embedded end-marketsQ1/Q2: mixed demand −8% y/y revenue; sequential up; continued design win momentum Stabilizing

Management Commentary

  • Strategic message: “Our record third quarter performance and strong fourth quarter guidance marks a clear step up in our growth trajectory as our expanding compute franchise and rapidly scaling data center AI business drive significant revenue and earnings growth.” — Dr. Lisa Su .
  • Cash discipline: “We delivered record quarterly revenue of $9.2 billion… and generated record free cash flow.” — Jean Hu .
  • 2026 outlook and products: “We would expect that MI355 continue to ramp in the first half of 2026… MI450 series comes online in the second half of 2026.” — Dr. Lisa Su .
  • Margin framing: “For our data center GPU business, the gross margin continues to improve when we ramp a new generation… priority is to expand top-line and gross margin dollars.” — Jean Hu .

Q&A Highlights

  • Transition and growth path: Management expects MI355 ramp to continue into 1H26 and MI450 ramp in 2H26, with strong demand visibility from customers .
  • Helios differentiation: High customer interest post-OCP; early MI450 customers likely to favor rack-scale solutions; collaboration with Sanmina to accelerate deployments .
  • CPU sustainability: Hyperscalers forecasting significant CPU builds into 2026; durable multi-quarter demand driven by AI workloads requiring general-purpose compute .
  • ROCm competitiveness: ROCm 7 delivers significant perf gains and broader framework/model support; ongoing investments to improve developer experience .
  • China export controls: Some MI308 licenses received but Q4 guide excludes MI308 given dynamic demand; work-in-process exists pending clarity .

Estimates Context

  • Revenue and EPS: Q3 revenue $9.25B vs $8.75B*, EPS $1.20 vs $1.171* — both beats; Q1 and Q2 were also modest beats vs consensus on revenue and aligned on EPS .
  • EBITDA: S&P consensus EBITDA for Q3 was ~$2.11B* vs S&P’s “actual” ~$2.02B*; note AMD reported Adjusted EBITDA of $2.43B (company-defined), highlighting definitional differences between reported “Adjusted EBITDA” and consensus frameworks .
  • Implication: Sell-side models likely to raise near-term Data Center and Client/Gaming revenue, with margin trajectories reflecting mix and R&D investments; Q4 segment guide implies estimate revisions across Gaming (down) and Embedded (up).
    Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • The print was a clean beat with record revenue/FCF, powered by MI350/EPYC/Turin and Ryzen; non-GAAP gross margin returned to 54% after Q2 export-related charges .
  • Q4 guide implies continued sequential growth and sets a high bar for Data Center into 2026 as MI355 carries the first half and MI450 ramps in the second half; watch Helios attach rates .
  • OpenAI’s 6 GW Instinct agreement and OCI launch partnership are meaningful demand signals and should support multi-year revenue visibility; monitor warrant vesting milestones and supply/power readiness .
  • CPU tailwinds look durable as AI workloads expand general-purpose compute needs; Turin mix lifts ASPs, with early Venice engagement indicating ongoing share gains .
  • Embedded remains mixed but sequentially better; design-win momentum (> $14B YTD) suggests medium-term recovery; model more cautious near term .
  • China export licensing is a swing factor; current outlook excludes MI308, offering potential upside if licenses convert to demand .
  • Near-term trading: Positive bias given beat/raise and AI pipeline momentum; medium-term thesis is tied to execution on MI450/Helios, ROCm adoption, and CPU share expansion.

Additional Notes

  • Non-GAAP adjustments: Q2 included ~$800M export-control-related inventory charges; AMD provided an adjusted non-GAAP gross margin (54%) excluding this charge to aid period comparison .
  • Balance sheet: Ending Q3 cash and ST investments $7.24B; total debt $3.22B; share repurchases totaled $89M in Q3 with $9.4B authorization remaining .
  • No dedicated 8-K 2.02 filing was returned by the document catalog; AMD’s earnings press release serves as the primary source for Q3 results .