Key Takeaways
- AMD shares fell 10.9% Friday to $505 after Intel’s weak PC outlook triggered a chip rout, leaving the stock 23% below its 52-week high.
- Lisa Su expects data center revenue to more than double in 2027, and AMD’s partnership with Meta covers 6 gigawatts of GPUs.
- AMD trades at 45.1x forward earnings, and the MI450 ramp could dilute gross margin as memory content rises.
- Tuesday’s report needs to beat the $13.09 billion revenue consensus and guide the fourth quarter toward a steeper data center ramp.
Advanced Micro Devices (AMD) had a strong six months. Friday took a big bite out of it.
The stock fell 10.9% to $505 after Intel (INTC) warned of weak PC demand, putting Intel on course for its worst day ever and dragging chip stocks down with it. AMD is still up 42.4% over six months, but it now sits 23% below its 52-week high of $659.
The timing stings. AMD reports third-quarter results on Tuesday, November 3, and its biggest AI customer story keeps growing. On October 27, AMD and Meta Platforms (META) advanced a partnership that already covers 6 gigawatts of AMD GPUs.
So did Intel’s warning say much about AMD? A little, and less than the selloff suggests.
Why Intel’s news hit AMD
AMD still has real PC exposure. Its client business brought in $3.1 billion in the second quarter, up 23%, or about 27% of revenue by my math.
The mix, however, has shifted hard toward servers:
- Data center revenue rose 107% to $6.7 billion.
- Data center made up 58% of revenue, up from 42% a year earlier.
- Gaming fell 31% on lower semi-custom sales.
Total revenue rose 50% to a record $11.5 billion, and non-GAAP EPS of $1.66 beat the $1.62 estimate.
Friday’s drop wiped out weeks of gains in one session…
With a five-year beta of 2.45, AMD tends to swing harder than the chip group in both directions.
Helios must carry the next leg
Lisa Su said in the second-quarter release that AI is driving “a significant expansion in demand for compute across all of our markets.” The guidance backs her up.
AMD guided third-quarter revenue to about $13 billion, plus or minus $300 million, implying 41% growth. Consensus sits at $13.09 billion of revenue and $1.95 of EPS, with data center revenue expected near $8.27 billion.
Production shipments of the MI450 and Helios rack platform began in September, with a bigger ramp due in the fourth quarter and the first half of 2027. Su now expects data center revenue to more than double in 2027, with server CPU revenue up more than 70%.
What does that shift look like by segment?
Data center became the clear majority of revenue in about a year, and Helios has barely started shipping.
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The premium leaves little slack
AMD trades at 45.1x forward earnings. Broadcom, which also sells AI silicon to Meta and other hyperscalers, fell 5.5% on Friday and trades at 18.7x.
Some of that gap reflects growth. Analysts expect AMD’s EPS to compound 95.3% a year over the next two years, against 68.9% for Broadcom.
Margins are the harder question. Rack-scale systems carry more memory and third-party content, so the MI450 ramp could dilute gross margin just as revenue accelerates. AMD guided third-quarter non-GAAP gross margin to about 56%, flat with the second quarter.
Here’s the premium against Broadcom.
Even after Friday, AMD costs about 2.4 times Broadcom’s forward multiple. The Street’s $640 average target implies 27% upside.
My take: Friday’s selloff treated AMD like a PC stock, yet data center is 58% of revenue and growing more than 100%. I think the drop overreacted to Intel’s news. Margin is the real risk, though, and at 45.1x I’d want the fourth-quarter guide to show data center acceleration with gross margin holding near 56% before adding.
The next checkpoint is Tuesday’s report after the close. Watch revenue against the $13.09 billion consensus, the fourth-quarter guide, and any comment on how MI450 shapes gross margin.
So what is Advanced Micro Devices stock actually worth?
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