AMD to report Q3 earnings following massive OpenAI, Oracle chip deals

Advanced Micro Devices (AMD) is set to report its fiscal third quarter earnings after the bell on Tuesday, following a series of massive AI chip deals with the likes of OpenAI (OPAI.PVT) and Oracle (ORCL).

Last month, AMD signed a deal to provide OpenAI with up to 6 gigawatts worth of graphics processing units (GPUs) to power its AI data centers. In turn, OpenAI agreed to purchase upwards of 160 million shares of AMD stock, equal to roughly 10% of the company.

AMD also inked a deal to team with Oracle and deploy up to 50,000 GPUs across the cloud company’s data centers.

AMD is also providing chips to power two Department of Energy supercomputers at Oak Ridge National Laboratory. The systems will represent a $1 billion public and private investment when completed.

The moves have sent AMD stock rocketing 56% over the past month. Shares are up 113% year to date and 81% over the past 12 months as of Monday.

But AMD still trails Nvidia (NVDA), which owns the majority of the AI market and recently saw its market cap cross the $5 trillion mark. AMD’s market cap sits at $418 billion.

For the quarter, AMD is expected to report earnings per share (EPS) of $1.17 on revenue of $8.7 billion, according to Bloomberg consensus estimates. That’s up from the $0.92 and $6.8 billion that the company saw in Q3 2024.

But analysts aren’t anticipating much of an impact from AMD’s latest deals in Q3. Instead, they say those will likely hit in the coming quarters.

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Both OpenAI and Oracle won’t begin deploying AMD’s next-generation MI450 line of GPUs until the second half of 2026. AMD is launching its MI450 GPUs as rack-scale offerings, which means they can slot into large collections of servers to operate as massive computing systems.

“Following a series of expert calls, our sense is that, following the initial tool up in [the second half of 2025], many customers seem to be pausing on MI355x and waiting for MI455 racks next year – not a huge issue, but something we think about given the recent rally in shares after signing the [OpenAI] deal,” UBS Global Research analyst Timothy Arcuri wrote in a note to investors.

AMD’s MI450 chips and rack-scale products, Morgan Stanley’s Joseph Moore wrote in an analyst note, will be an important part of the company’s future growth strategy.

“AMD’s rack-scale solution shipping next year is the key, and we are excited to see what the company can do,” Moore wrote.

“It’s still early to make market share assessments, and while the Open AI agreement is clearly an accelerant, the reliance on cloud providers to ramp those 6 gigawatts still creates some uncertainty,” he added. “Ultimately, to drive share gains, the company will need to provide better ROI than [Nvidia] can offer, and customers still raise questions about that given lower rack density and the need to resolve ecosystem issues.”

Still, both analysts said AMD should benefit from strong CPU sales in the quarter across both its data center and client businesses.

AMD’s data center revenue should generate $4.1 billion in Q3, up from $3.5 billion in the prior year, while the company’s client segment, which includes sales of CPUs for laptops and desktops, should see $2.6 billion, up 38% year over year.

AMD’s gaming division is expected to pull in $1.1 billion, up 139%.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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