Consumers and smart device manufacturers have been among the biggest losers in the memory price crisis driven by AI. Rising DRAM and NAND prices are pushing up the cost of making devices, forcing manufacturers to raise prices and, in some cases, deal with weaker consumer demand.
But one group is benefiting from the AI boom: chipmakers supplying the processors and accelerators needed to power data centres. AMD's latest earnings report is a good example.
The American chipmaker just posted the largest and most profitable quarter in its history. Revenue hit $13.38 billion, up 45% year over year. Data centre sales nearly doubled. And yet, the same AI boom driving that growth is putting pressure on another part of its business: consumer PCs.
Ogbonda Chivumnovu
Its data centre business is boosting revenue
AMD's revenue reached $13.38 billion, up 45% year over year and above analysts' expectations. The biggest contributor was its Data Centre segment, which generated $8.55 billion, up 97% year over year and 27% sequentially.
It now accounts for approximately 64% of AMD's total revenue, compared with 47% a year ago.
Non-GAAP earnings per share came in at $2.09, beating analysts' expectations of around $1.95.
"We delivered a record quarter with revenue exceeding the high end of our guidance as Data Center segment sales nearly doubled year-over-year," CEO Lisa Su said.
AMD expects fourth-quarter revenue of approximately $17 billion, plus or minus 3%. At the midpoint, that would represent roughly 66% growth year over year, comfortably ahead of the $16.2 billion analysts had expected.
The AI buildout is creating enormous demand for AMD's EPYC server CPUs and Instinct GPUs. Its latest Helios rack-scale systems are already running workloads for Anthropic, Meta, Microsoft, OpenAI and Oracle Cloud Infrastructure.
"Adoption is just starting, and we expect demand to grow sharply as agents are deployed more broadly and take on more complex work," Su said.
Su also said AMD now expects server revenue to double year over year in 2027, while its data centre AI business is expected to grow even faster than previously projected. The Data Centre segment is expected to account for more than 80% of the company's total revenue next year.
Why PC and gaming are under pressure
But here's where things get interesting. While AMD's Data Centre business is growing rapidly, its Client and Gaming segment is moving in the opposite direction. Revenue fell 8% year over year to $3.7 billion.
Gaming revenue dropped 40% to $773 million, primarily because of lower semi-custom sales as the current console cycle matures, alongside weaker graphics revenue.
The PC business, however, is facing a different problem: rising memory and component costs.
Although client revenue grew 7% year over year to $2.9 billion, it fell 4% sequentially. AMD said higher memory costs had weighed on PC unit demand, partly offset by stronger sales of higher-end processors.
Su acknowledged the pressure, saying, "Our view is this is one of those times when component prices go up. It affects overall system pricing. One would expect the consumer markets to be more sensitive to that. We have seen a bit of slowdown in the sell-through."
The wider PC market is also feeling the impact. Counterpoint Research reported that global PC shipments fell 21% year over year in Q3 2026. It expects shipments to decline by another 27% in Q4.
AMD is preparing for a difficult year ahead. Su said the company expects the PC market to decline by a double-digit percentage in 2027.
"We are planning with the current environment for a down year for 2027," she said.
AMD's outlook is stronger, but Intel isn't standing still
AMD isn't alone in benefiting from demand for data centre chips. Intel also reported strong growth in its Data Center and AI business, with revenue rising 78% to $7.3 billion in the third quarter.
However, Intel's overall outlook disappointed investors. The company forecast fourth-quarter revenue of between $15 billion and $16 billion, below analysts' expectations of around $17 billion. Its shares fell approximately 29% on October 30 as investors reacted to the weaker guidance and concerns about its ability to meet demand.
AMD, meanwhile, has offered a much stronger growth outlook for 2027. The company says it has worked across its supply chain to secure the wafers, substrates, advanced packaging, memory and other components needed to support higher production.
"We have worked across our supply chain to secure the wafers, substrates, advanced packaging, memory, and other key components needed to support much higher growth next year," Su said.
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