AMD reported stronger than expected third quarter results and forecast fourth quarter sales above Wall Street estimates, and said it expects sales growth of 80 percent in 2027, buoyed by demand for data centre chips. The company also forecast December quarter sales above Intel outlook, and if both companies meet those targets, AMD would outsell Intel for the first time in their history. It is a striking reversal for a company that spent decades as the smaller rival, and it says as much about where computing demand now sits as about either firm.
Why it matters
The reason is the data centre. AMD said server CPU revenue could potentially double, and its data centre sales nearly doubled in the latest quarter, according to market analysis. Artificial intelligence training and inference run on server hardware at a scale that phones and laptops cannot match, and the companies that supply that hardware are capturing the growth. Intel, by contrast, reported a weaker outlook last week, and the contrast between the two reports has become the clearest single illustration of the shift in the chip market.
Apple told a different story about the same supply chain. The company said its gross profit margin will fall this quarter because of surging memory chip prices, which it expects to keep rising well into next year. Apple forecast a gross margin of 45 to 46 percent in the crucial holiday quarter, down from 47.9 percent in the fourth quarter, and its shares tumbled on the news. Memory is the quiet constraint on the AI boom: every data centre needs it, every phone needs it, and supply has not kept pace with demand.
What happens next
The deal flow underlined the same theme. Marvell agreed on Monday to buy Lumentum for 115 billion dollars in stock, a combination aimed at leading connectivity for artificial intelligence data centres by joining Marvell chips with Lumentum lasers and optical parts. Meta announced a 15 billion dollar bond sale to help pay for its expanding AI infrastructure. The industry is consolidating and borrowing at the same time, which is what companies do when they believe the cycle has further to run but want scale and capital to survive it.
What to watch next is guidance rather than headlines. Chip companies live or die on what they say about the next two quarters, and AMD next report will test whether its 2027 forecast survives contact with a new Congress that wants to scrutinise data centre expansion. If demand broadens beyond a handful of cloud giants, the AMD story looks durable. If it narrows, the beat will look like a peak. Wednesday gave investors a reason for optimism, and a clear test for the next report.
