By Anhata Rooprai and Max A. Cherney
Nov 3 (Reuters) - AMD forecast fourth-quarter revenue above Wall Street estimates on Tuesday and the company's data-center revenue hit a record on robust demand as its multibillion-dollar effort to challenge Nvidia's dominance of the AI chip market gathers pace.
The upbeat forecast offered some relief to investors rattled by mounting concerns over the cost of the massive AI buildout and Intel's weak outlook.
Shares of AMD jumped over 8% in extended trading. The stock
has more than doubled so far this year. Intel's shares rose 2%, Nvidia stock climbed over 1% and Broadcom also advanced 1.2%.
On a conference call with analysts, AMD CEO Lisa Su said the company expects overall revenue to rise more than 80% in 2027. Su's forecast is higher than the 77% growth analysts expect, according to LSEG data.
Data-center revenue jumped 97% to a record $8.55 billion, exceeding estimates of $8.20 billion.
The company expects fourth-quarter revenue of about $17 billion, plus or minus 3%, above analysts' average estimate of $16.23 billion, according to data compiled by LSEG.
AMD's line of chips is positioned to benefit from the massive AI data-center buildout, portfolio manager at Gabelli Funds Hendi Susanto said.
"The stock's resilience despite broader pressure on AI-related names suggests investors see AMD's results as confirming its technology leadership and its strong position to keep gaining market share," Susanto said.
AMD is benefiting as a shift in AI workloads toward running models in real-world applications drives demand for its graphics processing units and central processors.
"The AMD numbers provide a greatly needed boost both for AI infrastructure and even, to a smaller degree, the PC market," chief analyst at TECHnalysis Research Bob O'Donnell said.
The company's adjusted gross margin is expected to be about 55%, in line with estimates of 55.27% and down from 56% in the third quarter.
AMD has stepped up AI product rollouts, moving beyond standalone chips to compete with Nvidia's rack-scale systems.
The company's flagship Helios rack, combining its MI455X accelerator and new "Venice" server chips, is in production and set for a larger ramp-up in the fourth quarter. The initial systems are being tested at Meta.
In February, the company agreed to sell up to $60 billion worth of AI chips to Meta over five years in a deal that allows the Facebook owner to purchase as much as 10% of the chip firm.
AMD's third-quarter revenue rose 45% to $13.38 billion, beating estimates of $13.09 billion.
Adjusted profit came in at $2.09 per share, compared with estimates of $1.95.
The semiconductor industry is also grappling with a global memory shortage, leaving expensive high-bandwidth memory used in AI processors in scarce supply as manufacturers race to increase production.
Third-quarter sales in AMD's client and gaming segment, home to its PC chips and console processors, fell 8% to $3.72 billion, missing estimates of $3.79 billion.
Beyond chips, AMD in September agreed to buy Fei-Fei Li's World Labs, a startup building AI that models 3D environments, for $8.2 billion in stock, gaining a foothold in research on physical AI systems.
(Reporting by Anhata Rooprai in Bengaluru and Max A. Cherney in San Francisco; Editing by Sriraj Kalluvila)
