AMD’s data-center sales nearly doubled. Its cash flow went the other way

A record quarter, with a cash-flow wrinkle

AMD reported record third-quarter revenue of $13.38 billion on November 3, up 45% from a year earlier. Data-center revenue jumped 97% to $8.55 billion, while the chipmaker forecast about $17 billion in fourth-quarter sales.ir

Yet free cash flow—a measure of cash from operations after capital expenditure—fell to $554 million from $1.53 billion a year earlier. Operating cash flow declined to $1.20 billion from $1.79 billion, while capital spending rose to $648 million from $258 million. The cash-flow statement also shows a $3.00 billion increase in inventories during the quarter, compared with $636 million a year earlier; changes in other working-capital accounts also affected cash.ir +1

Investors bought the growth story

AMD’s shares rose about 8% in extended trading after the results, CNBC reported. Adjusted earnings of $2.09 a share exceeded the $1.95 expected by analysts surveyed by LSEG; revenue also beat their $13.09 billion estimate. AMD’s fourth-quarter forecast was above the $16.2 billion consensus, though its expected adjusted gross margin of 55% was slightly below estimates.cnbc

On standard accounting measures, AMD earned $1.46 a share, versus $0.75 a year earlier. Its adjusted figure excludes items including stock-based compensation and a change in the fair value of warrants issued to customers.ir

AI demand is reshaping AMD’s mix

Data centers accounted for 64% of sales, up from 47% a year earlier. AMD attributed the segment’s rise to demand for EPYC server processors and its Instinct MI450 graphics chips. The company said several major cloud and AI customers are running workloads on its first Helios server racks.ir +1

AMD is still much smaller than rival Nvidia in data centers: Nvidia reported $89 billion in segment revenue in its latest available quarter, which ended in July, compared with AMD’s $8.55 billion for the quarter ended in September. The periods are not directly aligned.stocktitan In August, Reuters reported that AMD’s shares fell nearly 9% after its previous forecast, despite an above-estimate outlook, as investors sought even stronger growth.reuters

Gaming remains a drag

Not every business shared in the surge. AMD’s client and gaming segment generated $3.72 billion, down 8% from a year earlier. Gaming revenue alone fell 40% to $773 million, while client revenue rose 7% to $2.95 billion.ir Yahoo Finance reported that client sales missed analysts’ expectations even as the gaming result exceeded them.yahoo

The next test is whether AMD can deliver on its fourth-quarter forecast as it scales production of its Helios systems and newest server processors.ir