AMD announced its third quarter results. Sales, gross profit, and earnings per share increased year over year, but were not received favorably on Wall Street, with AMD shares falling nearly 5% before recovering late in the trading day. Revenue increased 4% y/y to $5.8 billion, while gross profit rose 17% to $2.75 billion. Mixed results were seen in the four main segments: data center, client, gaming, and embedded.

Sales in the data center segment were flat YoY, with higher EPYC sales offset by lower SoC sales. However, AMD has high expectations for its next-generation MI300A and MI300X compute GPUs, which it plans to introduce for HPC, cloud, and AI customers.

The client segment includes Ryzen desktop and mobile processors, which saw a significant 42% YoY increase in revenue due to higher sales of Ryzen 7000 series mobile processors.

The gaming segment was a weak spot, recording sales of $1.5 billion, down 8% YoY. This was reportedly due to lower semi-custom sales; it could have been worse, as AMD said that Radeon GPU sales were up from last year. However, AMD did not specify the amount.

Finally, the Embedded segment was down 5% from the previous year to $1.2 billion due to a weak telecom market and inventory revisions.

2022 and 2023 will be tough years for the PC market. On the consumer side, the impact of the pandemic, the prolonged shutdown in China, and the surge in telecommuting have prolonged the softening of demand. The outlook looks a bit better, with overall CPU shipments up in Q2 and the peak of the Black Friday and holiday sales season still to come.

However, the one area where AMD is really looking to cash in is, you guessed it, AI. The upcoming Instinct MI300X and MI300A accelerators will be the driving force behind this. The MI300A APU in particular is a very interesting design, mixing a Zen 4 CPU core and a CDNA 3 GPU core in one package. The unified memory architecture with up to 192GB of HBM3 memory should appeal to large language model operators. AMD's acquisition of AI software developer Nod.ai will be part of its overall strategy. If AMD can take market share from Nvidia If AMD can take market share away from Nvidia, it could generate a lot of revenue growth.

The gaming side of the business is a bit murky: following the release of the Radeon RX 7800 XT and Radeon RX 7700 XT, the RDNA 3 lineup appears to be complete. While not certain, it is probably a year away, and with months to go before the Zen 5-based Ryzen 8000 series arrives, the desktop side will probably remain flat. On the laptop side, we will have to wait and see how Intel's Meteor Lake-based laptops perform. That will have an impact on AMD's notebook market share.

It is clear that the big gains will be in AI and enterprise, and to a lesser extent in console, handheld, and mobile SoCs. if AMD can profit from the former, it will be good for the gaming business, I hope they continue to innovate and compete. It is something that all gamers will benefit from.