Advanced Micro Devices (AMD) FY2026 Q3 Earnings Explained
AMD jumps on data center AI tailwinds
AMD posted revenue of $13.38 billion this quarter, up strongly from a year ago, driven mainly by its data center business, especially strong demand for AMD EPYC processors and the AMD Instinct MI450 series GPUs. Gross margin rose from 52% a year ago to 54%, which the company said was mainly due to a better product mix and a higher share of data center revenue. Net income came in at $2.43 billion, and diluted EPS was $1.46, both well above last year. However, other income and expenses included a $902 million net expense, mostly tied to changes in the fair value of the customer warrant liability, which dragged on profit.
📊 Stock Price & Market Cap
- On the filing date, the stock traded at $488.78 per share, giving the company a market cap of about $801.64 billion, putting it firmly in mega-cap chip company territory.
- The stock is below its 52-week high of $649.42 per share, but far above its 52-week low of $190.95 per share, showing just how volatile it has been over the past year.
- Diluted EPS over the trailing 12 months was $4.61, which works out to a 106x trailing P/E. The market is clearly pricing in strong growth.
- The company has about 1.64 billion shares shares outstanding, so even small moves in the stock can have a big impact on its market value.
Data as of 2026-11-04 (filing date) · Price: Yahoo Finance · Shares & EPS: SEC filing · Forward P/E: not available · Yahoo Finance
🏦 What Wall Street Thinks
The analyst consensus is Strong Buy, with 38 Strong Buy ratings, 5 Buy ratings, 10 Hold ratings, and 0 Sell ratings. The target price range is from $430 to $1250 per share, and the average target is $647.19 per share. The big split is mainly about how much room there is for future AI growth.
Ratings as of: 2026-11-04 · Price targets as of: 2026-11-04 · Source: stockanalysis.com
Analyst forecasts are for reference only. Historically, price targets have not been very accurate. Invest at your own risk.
💰 How Much They Made
| This quarter | Year ago | Change | |
|---|---|---|---|
| Revenue | $13.38B | $9.25B | ▲ 44.7% |
| Gross profit | $7.21B | $4.78B | ▲ 50.8% |
| Operating profit | $2.83B | $1.27B | ▲ 123.0% |
| Net income | $2.43B | $1.24B | ▲ 95.3% |
| Diluted EPS | $1.46 | $0.75 | ▲ 94.7% |
- Revenue rose from $9.25 billion to $13.38 billion, driven mainly by the data center business, like an engine suddenly getting a much bigger turbo.
- Gross margin improved to 54%, which the company said was due to a better product mix, especially a higher share of data center revenue.
- Net income rose from $1.24 billion to $2.43 billion, mainly because operating profit was higher, though changes in the fair value of the warrant liability in other expenses also weighed on results.
📊 Where the Money Went
| This quarter | Year ago | Change | |
|---|---|---|---|
| Cost of revenue | $6.17B | $4.47B | ▲ 38.1% |
| Research and development expenses | $2.80B | $2.14B | ▲ 31.0% |
| Sales, general and administrative expenses | $1.30B | $1.07B | ▲ 21.4% |
- R&D expenses increased to $2.8 billion, which the company said was mainly due to higher employee-related costs as it kept expanding its data center chip, systems, and software capabilities.
- Sales, general and administrative expenses increased to $1.3 billion, mainly to support revenue growth and more market expansion efforts.
- Expenses are rising, but gross profit grew even faster this quarter, so operating profit still expanded meaningfully.
🏢 Business Segments
Revenue was $8.55 billion, nearly doubling year over year, mainly driven by strong demand for AMD EPYC processors and AMD Instinct GPUs. This was the quarter's most important growth engine.
Revenue was $3.72 billion, down year over year, as growth in client processors was offset by a decline in gaming. The company said gaming fell mainly because semi-custom product revenue declined.
Revenue was $1.11 billion, up year over year, thanks to stronger demand across end markets, with operating profit also improving as revenue increased.
This category mostly includes allocation and adjustment items. The quarter showed an operating loss of $1.08 billion, and the company said the wider loss was mainly due to higher stock-based compensation expenses from adding more employees.
🏦 Balance Sheet
| Period end | Prior FY end | Change | |
|---|---|---|---|
| Total assets | $94.81B | $76.93B | ▲ 23.3% |
| Shareholders' equity | $68.39B | $63.00B | ▲ 8.6% |
| Cash and cash equivalents | $7.40B | $5.54B | ▲ 33.7% |
| Long-term debt | $7.08B | $2.35B | ▲ 201.5% |
- Total assets increased to $94.81 billion, and shareholders' equity was $68.39 billion, so the company's balance sheet kept expanding.
- Cash and cash equivalents were $7.4 billion. In its MD&A, the company also disclosed that cash, cash equivalents, and short-term investments totaled $15.8 billion.
- Long-term debt increased to $7.08 billion, mainly because the company issued $4.75 billion of senior notes in August 2026 while repaying $875 million of debt that came due.
- Verified data does not include total liabilities, so we are not filling that in here.
⚠️ Total assets on the books ($94.81B) are not what the company is worth. The market values Advanced Micro Devices at $801.64B, 8.5× its book assets. The gap comes from things the balance sheet doesn't show: brand, technology, customer relationships and future earning power.
📈 vs. Last Quarter
| This quarter | Last quarter | Change | |
|---|---|---|---|
| Revenue | $13.38B | $11.54B | ▲ 16.0% |
| Gross profit | $7.21B | $6.20B | ▲ 16.2% |
| Operating profit | $2.83B | $1.99B | ▲ 42.3% |
| Net income | $2.43B | $2.30B | ▲ 5.7% |
| Diluted EPS | $1.46 | $1.38 | ▲ 5.8% |
- Compared with the previous quarter, revenue, gross profit, operating profit, and EPS all continued to move higher, showing that growth was not just a low-base year-over-year story.
- AMD's MD&A mainly explains year-over-year changes and does not separately spell out the reasons for quarter-over-quarter changes, so the QoQ section is shown only using verified numbers.
📅 vs. a Year Ago
| This quarter | Year ago | Change | |
|---|---|---|---|
| Revenue | $13.38B | $9.25B | ▲ 44.7% |
| Gross profit | $7.21B | $4.78B | ▲ 50.8% |
| Gross margin | 54.0% | 52.0% | |
| Operating profit | $2.83B | $1.27B | ▲ 123.0% |
| Net income | $2.43B | $1.24B | ▲ 95.3% |
| Diluted EPS | $1.46 | $0.75 | ▲ 94.7% |
- Revenue growth came mainly from the data center business, with strong demand for AMD EPYC processors and AMD Instinct MI450 series GPUs. The embedded business also contributed.
- The client and gaming business was a drag, mainly because demand for semi-custom products in gaming weakened.
- The gross margin improvement came from a better product mix, especially the higher contribution from the fast-growing data center business.
- Operating profit grew mainly because gross profit increased, although R&D and marketing expenses also rose at the same time.
- Net income grew mainly because operating profit improved, and there was also a tax benefit. However, other expenses related to changes in the fair value of the customer warrant liability put pressure on profit.
🎯 Key Takeaways for Investors
Data center revenue reached $8.55 billion, rising sharply year over year, and it was clearly AMD's most important growth driver this quarter. For everyday investors, that means AI and server chip demand are stepping on the gas for the company.
Gross margin climbed to 54%, which shows the product mix is becoming more profitable. But R&D and marketing expenses are also rising, as AMD invests more to compete for data center and AI opportunities.
Client and gaming revenue fell year over year, with gaming mainly hurt by weaker demand for semi-custom products. The company also disclosed large operating commitments, cloud capacity commitments, data center lease commitments, and guarantee arrangements, all of which are cash-flow pressure points to watch going forward.
The trailing P/E on the filing date was 106x, which shows the stock already embeds very strong growth expectations. If data center and AI growth falls short later on, valuation pressure could become more obvious.
The company said its existing cash, short-term investments, operating cash flow, and financing tools are enough to support operations and strategic activities for the next 12 months and beyond. AMD also plans to acquire Taalas and World Labs Technologies to strengthen model research, inference capabilities, and future hardware, software, and systems related to superintelligence.
📄 Original Filing
- Original 10-Q on SEC EDGAR (2026-11-04, accession 0000002488-26-000191)
- SEC filing index (incl. financial statements)
This page was generated by AI from the company's SEC filing and translated by AI. Not investment advice.