AMD Q3 2025 slides reveal 36% revenue surge, stock falls on future growth concerns

Advanced Micro Devices (NASDAQ:AMD) reported record financial results for the third quarter of 2025 on November 4, showcasing strong growth across most business segments. Despite beating analyst expectations with a 36% year-over-year revenue increase, AMD's stock dropped 3.67% in after-hours trading, reflecting investor concerns about future growth prospects.

Quarterly Performance Highlights

AMD achieved record revenue of $9.2 billion in Q3 2025, a 36% increase compared to the same period last year. This growth was primarily driven by strong demand across the company's Data Center AI, Server, and PC businesses.

As shown in the following revenue chart from AMD's presentation:

The company's profitability also improved significantly, with non-GAAP diluted earnings per share reaching $1.20, up 30% year-over-year, exceeding analyst expectations of $1.17. GAAP diluted EPS increased even more dramatically, rising 60% to $0.75.

The following chart illustrates AMD's EPS growth:

AMD maintained a non-GAAP gross margin of 54%, flat year-over-year, while GAAP gross margin improved by 2 percentage points to 52%. The company generated $1.8 billion in operating cash flow and a record $1.5 billion in free cash flow during the quarter.

The comprehensive financial results are detailed in the following P&L summary:

Segment Analysis

AMD's performance varied across its three main business segments, with Data Center and Client & Gaming showing strong growth while the Embedded segment declined.

The Data Center segment generated $4.3 billion in revenue, up 22% year-over-year, driven by strong demand for 5th Gen EPYC processors and AMD Instinct MI350 Series GPUs. Operating income for this segment reached $1.1 billion, a slight increase from $1.0 billion in the prior year.

The Client & Gaming segment demonstrated exceptional performance with revenue of $4.0 billion, up 73% year-over-year. Operating income for this segment surged to $867 million from $288 million a year ago, reflecting record sales of Ryzen processors, higher semi-custom revenue, and strong demand for Radeon gaming GPUs.

In contrast, the Embedded segment experienced an 8% year-over-year decline in revenue to $857 million, with operating income falling to $283 million from $372 million in the prior year.

The following table provides a comprehensive view of segment performance:

Strategic Initiatives and Partnerships

AMD highlighted several strategic initiatives during the quarter, with a particular focus on expanding its presence in the AI and data center markets. The company announced a significant partnership with OpenAI to deploy 6 gigawatts of AMD GPUs, demonstrating its growing competitiveness in the AI space.

Other notable developments included AMD's "Helios" rack-scale design, Oracle Cloud Infrastructure's new AI supercluster featuring AMD GPUs, and the release of ROCm 7 software. The company also announced new supercomputers in partnership with Oak Ridge National Laboratory.

In the client and gaming space, AMD launched Ryzen Threadripper 9000WX and PRO 9000X Series processors, while the embedded segment saw the introduction of new Versal RF Series and EPYC Embedded 4005 series products.

Forward Guidance

Looking ahead to the fourth quarter of 2025, AMD provided an optimistic outlook with expected revenue of approximately $9.6 billion, plus or minus $300 million, and a projected non-GAAP gross margin of around 54.5%.

The detailed Q4 2025 financial outlook is presented below:

AMD noted that its guidance does not include any revenue from AMD Instinct MI308 shipments to China, reflecting ongoing export restrictions.

Market Reaction and Analyst Perspectives

Despite AMD's strong quarterly results and positive guidance, the company's stock fell 3.67% in after-hours trading to $250.47, well below its 52-week high of $267.08. This negative market reaction suggests investor concerns about future growth prospects and increasing competition in the AI and semiconductor markets.

During the earnings call, analysts focused on AMD's partnership with OpenAI and the company's transition strategy from MI350 to MI450 GPUs. Executives addressed questions about supply chain challenges and power infrastructure, emphasizing AMD's resilience and strategic planning.

CEO Lisa Su highlighted the unprecedented demand for compute capabilities, stating, "The demand for compute has never been greater," and noted that AMD's "data center AI business is entering its next phase of growth." These comments underscore the company's commitment to maintaining its competitive position in AI and data center technologies.

While AMD's Q3 2025 presentation painted a picture of strong financial performance and strategic momentum, the market's cautious response indicates that investors may be looking for even more aggressive growth in the highly competitive semiconductor industry, particularly as the company targets significant revenue from AI by 2027.

Full presentation:

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