[News] AMD Defies AI Bubble Fears: Data Center AI Revenue to Top Server CPUs for First Time in 4Q, 2027 Sales Up 80%+
While Intel recently struck a cautious tone amid supply constraints, rival AMD painted a sharply different picture at its latest earnings call, citing strong momentum from the data center segment. According to Reuters, CEO Lisa Su expects the chipmaker’s overall revenue to soar more than 80% in 2027, ahead of Wall Street’s 77% forecast, with data center chips projected to generate 80% of total sales.
The optimism follows a record third quarter for AMD’s data center business, where revenue jumped 97% year over year to $8.55 billion, beating analysts’ estimates of $8.20 billion, Reuters notes. The segment’s contribution to total revenue climbed to 64%, up from 47% a year earlier, according to CNBC.
Within the data center segment, AI accelerators are poised to reach a major milestone. According to Futu News, CFO Jean Hu expects data center AI revenue to overtake server CPU sales for the first time in the fourth quarter, signaling a significant shift in AMD’s revenue mix.
Looking further ahead, Su projected that server CPU revenue would double year over year in 2027, while data center AI sales would more than double, positioning accelerators as an increasingly powerful growth engine.
Underpinning that momentum is the rollout of AMD’s next-generation AI products. According to Yahoo Finance’s earnings call transcript, Hu noted that the third quarter marked the first revenue-generating shipments of MI455 accelerators and Helios racks, with a substantial ramp-up expected in the fourth quarter and further expansion throughout 2027.
Meanwhile, AMD is broadening its AI infrastructure presence with Helios rack-scale systems, which compete with NVIDIA’s Grace Blackwell and Vera Rubin platforms. Major technology companies, including Meta, Microsoft, Anthropic, OpenAI, and Oracle, have begun deploying the systems in their data centers, Futu News reports.
AMD’s Bullish Outlook Meets PC Market Headwinds
Buoyed by robust data center demand, AMD expects fourth-quarter revenue of approximately $17 billion, plus or minus 3%, beating Wall Street’s consensus estimate of $16.23 billion, according to LSEG data cited by Reuters. However, adjusted gross margin is projected to edge down to 55% from 56% in the previous quarter, broadly in line with analysts’ 55.27% forecast.
Despite the upbeat revenue outlook, AMD is not immune to the broader PC market slowdown. Echoing rival Intel’s warning that weak demand could persist through the first half of 2027, AMD anticipates a double-digit percentage decline in industry-wide PC shipments next year, Reuters reports, adding that CEO Lisa Su nevertheless expects the company to outperform the market.
The cautious forecast follows an 8% year-over-year drop in AMD’s third-quarter client and gaming revenue to $3.72 billion, reflecting pressure on its PC chip and console processor businesses.
AMD Turns to Long-Term Deals as Component Costs Rise
Notably, AMD is also navigating mounting supply chain cost pressures. Asked how soaring HBM prices could affect its Instinct accelerator business, CEO Lisa Su noted that the company has secured “long-term agreements with some of our suppliers as well as some of our customers,” according to Yahoo! Finance. However, she cautioned that inflationary pressures extend beyond memory, with other components also facing rising costs.
On supply readiness, Su stressed that AMD has spent significant time working with customers to understand their deployment needs and schedules. The chipmaker has also been coordinating closely with supply chain partners to ensure access to the wafers, substrates, advanced packaging, memory, and other key components needed to support its anticipated growth.
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(Photo credit: AMD)
