Your AMD Stock Thesis Still Has Loose Ends

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Advanced Micro Devices (AMD) expects its revenue to grow more than 80% in 2027, which is more than twice the long-term pace it set out a year earlier. That growth depends on AMD’s newest AI chips, the MI455 GPUs sold in Helios racks, ramping quickly. It also requires AMD and its customers to have the parts and the data center sites to run them. Management says both are lined up, but the ramp has only just begun.

AMD’s Data Center Sales Nearly Doubled In Q3 2026

The racks have started shipping, and the business around them is growing quickly. The third quarter of 2026 was the first in which AMD shipped MI455 GPUs and Helios racks for revenue, and management has said the fourth quarter brings a big step up. On AMD’s third-quarter 2026 call, 6 of the 14 analyst questions, coming from five different analysts, touched on the data center and AI business.

Data center revenue grew 97% from a year earlier, compared with 44.7% growth for AMD as a whole. Data center made up about 64% of revenue in the third quarter, up from 58% the quarter before. Management expects it to be more than 80% of revenue in 2027.

Are AMD’s Supply And Customers Ready For 2027?

Management says they are, though demand is still running ahead of supply. AMD has secured the wafers, substrates, advanced packaging and memory needed to support much higher growth in 2027, management said. The company is also working with its suppliers to add more.

On the customer side, management has said AMD has good visibility into 2027. It knows which data centers the GPUs are going to, down to the land, power and buildings.

What AMD Has Not Said About 2027

AMD has not put a number on its AI chip sales for 2027. Management expects server processor revenue to about double and data center AI revenue to “significantly more than double.” The company said those figures should be taken only as rough pointers.

Gross margin is open too. Management said the company’s gross margin will depend on the mix between the AI chips and the server processors, and that it does not yet have visibility on the 2027 margin. The company pointed to the fourth quarter, when AI sales will be much larger than server processor sales, as a guide, and forecasts an adjusted gross margin of about 55% for that quarter. On the same adjusted basis, gross margin was 56% in the third quarter.

The ramp also costs cash up front. Inventory rose about $3 billion in the third quarter to $11.5 billion, which management said was to fill data center demand. Free cash flow fell to $554 million, down from $1.56 billion the quarter before. If the racks arrive late, or customers’ sites are not ready, AMD would fall short in the business that management expects to drive most of its revenue and earnings growth in 2027.

So far, AMD has shipped its first Helios racks. Management says the supply and its customers’ sites are lined up for 2027, while demand still runs ahead of supply. When AMD reports in February 2027, its fourth-quarter data center revenue is the figure to watch against management’s forecast of about 50% growth from the third quarter.

A ramp can run late, and so can a market. Here’s how to build for either outcome.

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