AMD Just Raised the Stakes for 2027Advanced Micro Devices, Inc.BATS:AMDmoonyptoHi everyone, markets are getting crushed, but AMD just delivered a quarter that deserves some attention Q3 revenue climbed 45% year over year to $13.4 billion, beating expectations by $290 million. Adjusted EPS jumped 74% to $2.09, topping estimates by $0.15. Operating margin expanded 7 percentage points to 21%, showing how quickly profitability is improving as the business scales. Data Center revenue nearly doubled to $8.5 billion, up 97% Y/Y and 27% Q/Q. The segment now accounts for 64% of AMD’s total revenue, compared with 58% in Q2. Operating margin also improved to 34%, up from 31% last quarter Both AI accelerators and server CPUs are fueling this growth. The Instinct MI450 series has entered volume shipments, while cloud providers continue expanding EPYC deployments to handle agentic AI workloads..Meta, Microsoft, OpenAI, Anthropic, and Oracle are already running workloads on AMD’s first Helios rack scale systems Outside Data Center, the picture was more mixed: Client revenue rose 7% to $2.9 billion, but growth slowed sharply as higher memory prices weighed on PC demand. Gaming revenue dropped 40% to $773 million, reflecting weaker console and graphics sales. Embedded continued its recovery, accelerating to 29% growth and reaching $1.1 billion. Data Center revenue breakdown The real surprise came from the outlook. AMD expects Q4 revenue to reach $17 billion at the midpoint, roughly $800 million above consensus. That implies 66% Y/Y growth and a 27% sequential increase. Data Center revenue alone is expected to grow around 50% Q/Q, with AI accelerator revenue surpassing server CPU revenue for the first time Lookin further ahead, Lisa Su now expects revenue growth of more than 80% in 2027, with Data Center accounting for over 80% of the business. Server CPU revenue is expected to double, while Data Center AI revenue should grow even faster..Of course, there are some trade-offs. Q4 gross margin is expected to slip from 56% to 55% as AI accelerators become a larger part of the product mix. Free cash flow also dropped to $554 million, down from $1.6 billion in Q2, as AMD added $3 billion to inventory to support its infrastructure expansion AMD is moving into the AI opportunity faster than expected. Helios is entering production, EPYC is benefiting from the growing demand for agentic workloads, and the 2027 outlook is raising expectations considerably But the market had a different reaction. Shares initially rallied after earnings before plunging more than 17% during Thursday’s broader AI stock selloff. It’s a reminder that even the strongest growth stories aren’t immune to shifting investor sentiment, especially when expectations around AI infrastructure are running this high AMD’s fundamentals look stronger than ever, but the market clearly has other concerns. Do you think AMD can live up to its ambitious 2027 guidance, or are investors getting ahead of themselves?