"Record revenue and profitability" — AMD crushes Q3 expectations, and the biggest money maker might not be what you expect

AMD's third-quarter financial results for 2025 are in, and they're looking good for the NVIDIA and Intel competitor almost entirely across the board. In the age of astronomical AI-related spending, it's great to see Team Red making headway with its consumer graphics card and processor business, and not just AI chips.

Not only did AMD's revenue grow in the third quarter, but it broke a record at $9.2 billion with a gross margin of 52%. That revenue represents a 36% year-over-year increase, which AMD Executive Vice President Jean Hu says "generated record free cash flow."

With $1.3 billion in operating income and $2 billion of net revenue, diluted earnings per share work out to $0.75. Looking at the results with a non-GAAP eye — which can often give a better picture of core operations — AMD says its gross margin was 54% and diluted earnings per share were $1.20.

Before these earnings were made public, I probably would have placed my bet on AMD's specialized AI chips — known as Instinct — making the most money for the company. That is, however, not the case at all.

AMD says its data center segment's revenue was $4.3 billion, a 22% increase compared to the third quarter of 2024. The company says this growth was, unsurprisingly, driven by its specialized EPYC CPUs and Instinct MI350 GPUs.

It's the client and gaming segment that shows the most growth, and it's not close at all. Third-quarter revenue from this segment was $4 billion, which is an increase of 73% compared to the previous year.

Client revenue alone broke an AMD record at $2.8 billion, an increase of 46% year-over-year. AMD says these record sales were driven by its consumer Ryzen CPUs and "a richer product mix."

Considering the almighty AMD Ryzen 7 9800X3D — widely considered the best CPU for PC gaming and a nice upgrade over its predecessor, the 7800X3D — and its other new X3D siblings launched at the end of 2024, it's pretty clear that the demand for AMD's coveted CPUs is only climbing.

Ryzen is undoubtedly a hot buy, but it was AMD's Radeon gaming GPUs that grew the most in the third quarter. Gaming revenue hit $1.3 billion in the third quarter, which was a 181% year-over-year increase.

AMD has positioned itself on the launch pad ... will it take off?

AMD's third-quarter 2025 results are impressive, but, of course, it's not always easy to maintain such a performance.

"Our record third quarter performance and strong fourth quarter guidance marks a clear step up in our growth trajectory as our expanding compute franchise and rapidly scaling data center AI business drive significant revenue and earnings growth," said Dr. Lisa Su, alluding to some of the deals AI has coming its way in the next few years.

NVIDIA has propelled itself to the top of the world market charts with its specialized AI GPUs, recently blowing past a $5 trillion valuation as the first ever company to do so. AMD undoubtedly wants some of the action.

AMD notes that its AMD AI platform is gaining interest, alluding to the massive OpenAI partnership worth tens of billions of dollars announced in early October 2025. It involves 6 gigawatts of AMD's Instinct AI GPUs powering OpenAI's next-gen infrastructure; the first gigawatt is set to deploy in the second half of 2026.

Of course, the current tensions between the US and China are getting in the way of Instinct AI GPU sales to one of the largest AI markets in the world, but AMD has priced that into its expectations.

AMD expects that fourth-quarter revenue will be somewhere around $9.6 billion, another increase compared to the third quarter, and that "does not include any revenue from AMD Instinct MI308 shipments to China."

Business is indeed taking off for AMD, and it's great to see that it's not just all AI-related revenue. There are serious concerns about a growing AI bubble that wants to wipe out the stock market should it ever burst, but it looks like AMD's more traditional money makers — GPUs and CPUs — would act as great insulators against the storm.

(via PC Gamer)

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