$AMD · Jose Najarro Stocks · 2026-11-04

AMD has just announced its earnings, and if you are an AMD shareholder, you are feeling very excited, because not only did they excel in the third quarter, but the outlook for the fourth quarter is absolutely stunning.

There are two main things currently driving this market for AMD: the central processing unit ( CPU) market and the graphics processing unit (GPU) market. Today I really want to take a closer look at AMD.

They chose to announce their earnings , and this is one of the stocks we follow a lot on the channel.

Their performance was very good. The stock was up by about 5% the last time I checked . For third-quarter revenue, they achieved approximately $13.4 billion, and we'll take a look at how that exceeded expectations shortly.

As for the average revenue for the fourth quarter, it was around $17 billion. The two markets that really help them are the central processing unit (CPU) market, which is performing extremely well.

A sort of opposite to Intel, and we talked about this last week when Intel announced its earnings, as I thought AMD had a better supply chain partnership than Intel, didn't it?

The other thing is that we have finally started shipping Helios units, and this is creating a lot of excitement for the market as a whole. Initial reactions, as mentioned , saw shares rise by about 5% after trading hours .

Tomorrow, we've seen this crazy volatility in the last few weeks in the AI market , so things could change, but after trading hours, the market loves results.

The company reported $13.4 billion in revenue. The market was expecting approximately $13.1 billion. So, there was a good advantage there. For adjusted earnings per share in the third quarter, the market was expecting around $1.94.

AMD gave us $2.09, so there was a good edge in adjusted earnings per share.

I think the biggest gain, the biggest gain, was the fourth quarter revenue. At the midpoint, AMD projected revenues of $17 billion while the market was expecting around $16.2 billion .

So, I think these predictions, and we will see that they also shared more comments about 2027 and the kind of accelerated progress they are seeing in AI accelerators and in the central processing market, are creating a lot of excitement for the entire market.

But the data center market now constitutes a huge and massive part of the total revenue share. $8.5 billion in the third quarter, up 97% year-over-year, representing 64% of total data center revenue.

For AMD, given that the data center market represents the largest part, if you see tremendous growth here, you will clearly notice it in their profit figures and revenue figures as well.

Here we can see that the story of artificial intelligence has finally begun for AMD. We continue to see an improvement in revenue on a quarterly basis. Revenue for the third quarter of last year amounted to $9.2 billion.

It reached approximately $11.5 billion in the second quarter of 2026. As for the third quarter of 2026, it reached $13.4 billion, which is what we just saw . In the fourth quarter of 2026, we expect revenues to reach $17 billion at the midpoint.

Now, they've given us great feedback regarding the fourth quarter. For the fourth quarter, the data center sector is expected to grow by at least 50% quarter-on-quarter, making it a market worth $12.8 billion .

The consumer and gaming sectors, unfortunately, and just like Intel, are experiencing weakness and decline in the consumer market due to memory prices. This sector is expected to experience a decline of more than 20%.

Fortunately for AMD, the integrated market is expected to see double-digit growth. Therefore, the two leading markets, with data centers growing as a larger segment by more than 50 %, will outweigh any negative impact on the stock.

The recovery of the integrated market is also very strong for the company's business. So, what is driving this growth? Helios, isn't that right? The Helios system, the integrated system they created, has finally started shipping.

Shipments of the MI455 system began this quarter.

They shipped it to Meta, OpenAI, Anthropic, and Oracle. So, you have some very good players.

Now, in the fourth quarter , there will be wider deployments as OEM and design manufacturing systems also begin shipping. Companies like Dell, and companies like SuperMicrosoft, will start shipping these systems in the fourth quarter.

Therefore, you should expect an increase in that.

Regarding the 2027 outlook for the Helios market, it will continue to see this upward trend depending on supply and customer infrastructure. But we will see from the comments they made for 2027 that they are very confident about overall growth.

What I also found interesting was their mention of the MI 500, the next generation of AI graphics processing units , which are already the subject of multiple discussions with major players regarding multi- gigawatt capabilities.

These are not confirmed requests, but when Lisa Su gives us this information, I think she is indicating that discussions with the Advanced Technology Labs are going very well .

I think she's telling us this to reinforce our confidence that it's not just about buying an MI450, is it? There is already a plan in place for them to purchase multiple generations of AMD products.

And now, this is the other part that drove the stock price up, in my opinion. Server CPU forecasts for 2027. Previous server growth, announced 3 months ago, was 70% in the CPU market .

Now, this is expected to grow by about 100%. We now expect server revenues to double year-on-year in 2027.

When Lisa Su gives us something, she is usually very discreet about it. Therefore, the CPU market is likely to grow at a higher rate. Now, more importantly, it is the increase in units and the higher number of cores that are driving this growth.

The average selling price has increased, but not by much, not much.

This tells me that if there is a massive shortage and AMD decides at any time to raise prices as we see on the memory side, which I don't think they will do. There is an opportunity to achieve higher profit margins and revenues simply through the average selling price. They have not yet exploited this power.

Another interesting point is that they mentioned OpenAI chose the EPYC host processor for its first custom accelerator, "Jalapeno," right? So, even if you don't buy a full AMD system, you're still relying on them for server CPUs as well.

Another thing is that they have plans to ship more Helion platforms in the fourth quarter, which is just a reference design for a platform that only has central processing units.

This is because artificial intelligence and high-performance computing workloads currently dominate the market.

They talked about Dots and Muse, where these AI proxies use AMD's server CPU space. As for total revenue, they expect total revenue to grow by more than 80% in 2027. They also expect the data center share to grow by more than 80% year-on-year.

So this would be crazy, because the market is currently expecting revenues of around $52 billion for fiscal year 2026. If you're growing at 80%, you're approaching a revenue market of $94 billion for fiscal year 2027.

These are just estimates, but it's crazy, isn't it? Because I actually set up a model in past earnings of what we'll see in fiscal year 2027, and my model was in the range of 86 to 96.

So I'm roughly at the middle point in that set of data on total revenue we expect to see here for AMD in fiscal year 2027.

Now they also mentioned that its AI accelerators and graphics processors come with slightly lower profit margins. Third quarter margins reached 56%. Fourth-quarter margins are expected to fall to 55%, and to me that's not crazy, especially when revenues are growing at faster rates.

AMD hasn't committed to 55% being the minimum, but I don't think we'll go much lower than that either.

Unfortunately for AMD, and this is something the pessimists will probably exploit, the increased production consumes a lot of cash. They recorded $11.5 billion in quarter-end inventory, up $3 billion from the previous quarter, while free cash flow was only $554 million .

Optimists like myself will say they are building up this inventory because they have a lot of rack servers to sell. I think we'll see crazy revenue figures in fiscal year 2027.

Overall, the data center will be the strong point here. Some of the more optimistic aspects of that. Unfortunately, the consumer market and the gaming market are expected to be weak not only in the fourth quarter, but even in 2027 as well.

They have two acquisitions expected to be completed by the end of this year: Talos and World Labs . I'm still a little confused about what they really want to do with both of these deals.

I wish Lisa Su would give us a clearer picture. To me, it seems like a little focus on the robotics industry. This looks like the next big thing in the AI market, but I just wish Lisa Su could clarify how these two companies will work together and how they will work with AMD.

I don't think she has painted a clear picture for us yet . It leaves us somewhat hanging, but if you think something else, let me know in the comments below. Again, both deals are expected to close by the end of this year.

Now, based on market expectations for the next twelve months, AMD stock is trading at a price-to-earnings ratio of approximately 34.3. For the full fiscal year 2027, it is actually trading at forward earnings ratios of 31.8.

This is based on expectations that existed prior to these profits. If we see an increase in guidance, the fiscal year 2027 estimates are likely to be in the late twenties. That is, 28 or 29.

And to me, that doesn't seem crazy, does it? For a company that is expected to continue growing. I don't think fiscal year 2027 will be the highest for them either, do I? I think we will continue to grow, perhaps not at the same rate, but when the 2020 fiscal year is trading in the high twenties in this AI market, I don't think it's crazy, and I personally don't see a big sign of a bubble in my portfolio .

Right now, my overall focus on the company as a whole is to continue monitoring Helios revenue shipments and how that will develop in the fourth quarter. Continued monitoring of the central processing unit (CPU) market, the severity of shortages, profitability tracking, inventory mix, and cash flow.

I started building more and more supply chains. I still believe this company will reach a value of over a trillion dollars, and much faster than most people expect. I am generally optimistic about this company.

However, at the same time , the market is extremely volatile, so that doesn't mean that stocks will rise in a straight line according to my expectations , but I think AMD stock will be very healthy for my investment portfolio.