Advanced Micro Devices (NASDAQ:AMD) received a significant vote of confidence on Thursday as William Blair analyst Sebastien Naji upgraded the chipmaker's stock from Market Perform to Outperform. The upgrade comes on the heels of a blockbuster third-quarter report that revealed the company's data center business is now the undisputed engine of growth, accounting for a staggering 101.8% of the company's total revenue increase.
According to AMD's November 4 filing with the SEC, data center sales surged by $4.205 billion year-over-year in the third quarter, while total company revenue grew by $4.131 billion. This means the data center segment alone contributed more than the entire company's growth, as other business units collectively saw a $74 million decline in sales. The data center division now represents 63.9% of AMD's total quarterly revenue, up sharply from 47.0% in the same period last year.
Breakdown of Growth Drivers
The growth story is heavily concentrated in data centers, but other segments showed mixed results. Client segment revenue added $199 million, and embedded products contributed $252 million. However, gaming revenue plummeted by $525 million to just $773 million, dragging down overall performance. The combined losses from gaming and other smaller businesses were not fully offset by gains in client and embedded, making data centers the sole driver of meaningful expansion.
In absolute terms, AMD's data center business generated $8.546 billion in revenue during the quarter, out of total company sales of $13.377 billion. This represents a significant leap from the $4.341 billion the segment brought in during the third quarter of 2025. The company's filing groups server CPUs and AI accelerators together, so it does not separately disclose revenue for AI chips specifically. However, the data clearly underscores the growing importance of AI-related demand.
Analyst Outlook and New Product Announcement
William Blair's Outperform rating is defined as expected performance above the broader market over a 12-month horizon, typically benchmarked against the S&P 500. The upgrade reflects confidence in AMD's ability to sustain momentum, especially as it unveils new products tailored for AI workloads.
On Thursday, AMD introduced a new GPU configuration, the MI450X, designed for its Helios systems. The MI450X features 288 gigabytes of HBM4 memory, matching memory capacity to customer workloads. Andrew Dieckmann, AMD's data-center GPU chief, stated that the company is "giving customers more options to power their next generation of AI workloads." The announcement did not disclose specific revenue expectations for the new configuration, but it signals AMD's aggressive push into the AI accelerator market.
Q4 Outlook: A High Bar
AMD's next major test is its fourth-quarter outlook, issued on November 3. The company forecasts revenue of approximately $17 billion, plus or minus 3%. At the midpoint, that implies a sequential increase of $3.623 billion, or 27.1% growth from the third quarter. Even the low end of the range would require a $3.113 billion sequential boost. These projections assume no particular mix of accelerators, CPUs, or other products, but they place significant pressure on the data center segment to deliver.
Risks to the outlook include potential delays in Helios production and customer deployment schedules, which could push revenue recognition into later periods. Export restrictions and supply chain constraints also pose threats to shipment volumes. With other business units shrinking in aggregate, AMD's ability to meet its guidance hinges almost entirely on data center execution.
Market Context and Implications
The upgrade and strong data center performance come at a time when the semiconductor industry is increasingly bifurcated between AI-driven growth and traditional computing markets. AMD's rivals, including NVIDIA (NVDA) and Intel (INTC), are also vying for dominance in AI accelerators. AMD's data center revenue growth of over 90% year-over-year is a clear signal that it is capturing a significant share of this expanding market.
Investors will be watching AMD's fourth-quarter earnings closely to see if the company can deliver on its ambitious guidance. The key question remains: how much of the growth will come from AI accelerators versus traditional server CPUs? The answer will determine whether AMD can maintain its upward trajectory in a highly competitive landscape.
