In yesterday's article "Earnings Preview: Notebook and Data Center Optimism, AMD Q3 Poised for Another Record," we noted that after Intel reported, the earnings certainty for its rivals AMD and NVIDIA improved further. That proved true.
AMD Q3 revenue $4.313B, up 54% year over year and 12% sequentially, a fifth consecutive quarterly record; GAAP gross margin 48.4%, up 4.5 pct year over year, a high since 2006; GAAP net income $923M, up 137% year over year and 30% sequentially, the second-highest ever; non-GAAP net income $893M, up 78% year over year and 15% sequentially, a fifth consecutive quarterly record.
Slapping Intel: AMD Data Center Unstoppable
We previously judged: Intel's data center cloud revenue plunged 20% year over year in Q3, the fourth straight quarter of 15%+ declines. Combined with AMD EPYC winning hyperscaler orders, we inferred AMD's data center CPU continues to eat Intel's share.
Intel blamed the cloud decline on China gaming regulation, saying it would affect Q4. AMD's CEO said on the Q3 call that's not the case.
Intel Data Center ASP Keeps Falling
AMD's data center remained strong in Q3, doubling year over year, reaching nearly 25% of quarterly revenue, approaching $1B.
The biggest driver is EPYC CPU, deeply tied to NVIDIA, with EPYC revenue setting records for six consecutive quarters, maintaining year-over-year doubling and high double-digit sequential growth. The third-gen EPYC Milan is AMD's most successful generation; the fourth-gen EPYC Genoa is expected to debut in early November.
On the data center GPU side, driven by Frontier supercomputer deliveries starting in Q3, data center GPU revenue doubled year over year and grew strongly sequentially.
As for Intel's data center recovery in government and enterprise, AMD also posted strong growth. For Q4 and next year, AMD remains bullish on data center.
AMD CPU Share Rises for Sixth Straight Quarter
Intel Q3 PC revenue $9.664B, down 1.9% year over year, first time below $10B in a year. PC operating margin 34.3%, down for the third straight quarter, a low since Q2 2020.
AMD shows a stark contrast: Ryzen CPU strength continues, Ryzen 5000 series notebook shipments up double digits sequentially; overall CPU share up for the sixth straight quarter, CPU ASP up both year over year and sequentially. High-end gaming notebooks, commercial notebooks, and workstations showed notable year-over-year growth.
Next-Gen Game Console Business Ramps, Profitability Recovers Sharply
First-half console shipments were limited by capacity; AMD previously guided for a gradual ramp in the second half, with sequential growth versus the first half.
Execution matched the plan: PS5/Xbox Series X|S remain supply-constrained. Q3 game console revenue grew both year over year and sequentially, with Q4 expected to grow further sequentially. As console volumes ramp, margins are also recovering.
For next year, Lisa Su noted consoles typically peak in year four; next year is year three.
Q4 Guidance Upbeat, but Market Focuses on Next Year's Growth
AMD's Q4 guidance is optimistic, expecting revenue of $4.5B, up 39% year over year, a sixth consecutive quarterly record. Non-GAAP gross margin to break 49.5%, closing in on Intel.
But the market seems more focused on next year's growth rate, given this year's 65% revenue surge. AMD expects to close the Xilinx acquisition by year-end, which would add a layer of earnings growth assurance.
Regarding the prior 5-year 20% revenue CAGR target, AMD says data center will be the key driver. With AMD's data center, deeply tied to NVIDIA, already firing on all cylinders, NVIDIA's data center Q3 is also expected to deliver a strong result.
Seeing Facebook go all-in on the metaverse is striking. Zuckerberg disregards near-term returns and stock volatility, betting the next 10 years to forge a second growth curve for a company that could coast on 3 billion MAUs. Silicon Valley innovation never sleeps; respect.