AMD's record quarter: Data center business doubles, while gaming craters

AMD reported third-quarter revenues on Tuesday with a record $13.4 billion, an increase of 45 percent year over year, as data center business nearly doubled and the company's gaming segment cratered.

AMD CFO Jean Hu said, "We expect revenue to be approximately $17 billion, plus or minus 3%. The middle point of our guidance represents approximately 66% year-over-year revenue growth, primarily driven by the acceleration of our Data Center segment." AMD says its Q4 revenue projections are up another 27 percent from this quarter's results. As reported by Tom's Hardware, Intel's Q4 guidance places revenue estimates between $15 billion and $16 billion. That means that if both companies land where they expect to at the end of the fourth quarter, AMD would exceed Intel's revenue for the first time in history.

The data center segment of AMD's business was up 97 percent year over year, with a record $8.5 billion. AMD attributes the growth to demand for its EPYC line of enterprise server CPUs, along with the launch of the Instinct MI450 series GPUs. Sales of AMD Ryzen mobile chips led growth in the Client business, which includes desktop Ryzen processors and posted $2.95 billion in revenue, up 7 percent year over year.

Gaming revenue fell sharply for the company, posting a 40 percent drop in revenue at $773 million, which AMD attributes to "lower semi-custom and graphics revenue." Operating margins in AMD's data center business expanded from 25 percent to 34 percent, with operating income surging 168 percent to $2.88 billion.

Embedded segment revenue, or all the SoCs, FPGAs, and boards under AMD's umbrella that go into other hardware, was $1.1 billion, up 29 percent. AMD attributed this growth to gains made in the "aerospace and defense, automotive, communications, and industrial end markets."