Goldman Sachs: AMD’s data-center growth is accelerating; the company expects revenue growth of more than 80% in 2027

What drove the third-quarter earnings beat?

AMD reported third-quarter 2026 revenue of 13.377 billion dollars, above the market consensus of 13.114 billion dollars; earnings per share excluding stock-based compensation expense were 2.09 dollars, also above the consensus of 1.95 dollars.
Data-center revenue was 8.546 billion dollars, up 97% year over year and above market expectations of 8.249 billion dollars; client-business revenue was 2.949 billion dollars, below the consensus of 3.077 billion dollars. Strength in data centers masked the relative weakness of PC-related businesses.

AMD began delivering MI455 to customers such as large cloud-service providers in the third quarter, and management expects several original design manufacturers to increase shipments in the fourth quarter. Server CPU revenue reached a record for the period, and customers’ AI deployments are also supporting demand.
Management expects data-center revenue to grow well over 100% year over year in 2027, and total-company revenue to grow more than 80%; server CPU revenue is expected to double, with improved supply being one reason for the raised outlook.
Goldman Sachs raised its 2027 data-center revenue forecast by 10.9% to 83.732 billion dollars and its total-company revenue forecast by 6.4% to 101.96 billion dollars, implying year-over-year growth of 94.8%; at the same time, the firm lowered its client-revenue forecast by 17.8% to 10.472 billion dollars.

AMD’s fourth-quarter revenue guidance midpoint is 17 billion dollars, above the market consensus of 16.3 billion dollars but below Goldman Sachs’ forecast of 17.6 billion dollars. Based on the guidance, earnings per share excluding stock-based compensation expense are estimated at 2.92 dollars, above market expectations of 2.65 dollars.
The company expects fourth-quarter data-center revenue to grow about 50% sequentially, while embedded business grows at a double-digit rate; combined revenue from client and gaming businesses is expected to decline more than 20% sequentially.

AMD’s fourth-quarter non-GAAP gross-margin guidance is 55%. Goldman Sachs believes the favorable impact from server CPUs can offset gross-margin pressure from the rapid GPU ramp-up and expects gross margin to remain around 55% in 2027; management also expects a larger revenue base to help absorb fixed costs.
Management expects operating expenses to grow at less than half the rate of revenue growth in 2027, so more of the growth may translate into profit. Goldman Sachs raised its 2027 earnings-per-share forecast excluding stock-based compensation expense from 17.10 dollars to 19.20 dollars.
Goldman Sachs maintained its Buy rating but lowered its 12-month price target from 700 dollars to 675 dollars: although its normalized earnings-per-share estimate rose from 22 dollars to 22.50 dollars, a decline in comparable-company valuation multiples led the firm to lower its price-to-earnings multiple from 32 times to 30 times.