AMD Q3 2026: Data Center revenue up 97% to $8.5B, as a $1.1B warrant charge held GAAP EPS to $1.46

AMD designs processors and accelerators and has them made by contract manufacturers. Its Data Center segment sells EPYC server CPUs and Instinct GPUs, now shipped as Helios rack-scale systems; Client and Gaming covers Ryzen PC chips, Radeon graphics and the semi-custom chips inside game consoles; Embedded sells adaptive and embedded chips into industrial, automotive, aerospace and communications markets. In Q2, Data Center was already the largest segment. This quarter it was nearly two-thirds of revenue.

The tension is between the operating line and everything below it. Operating profit grew faster than revenue, and every segment except Client and Gaming widened its margin from a year earlier. But the warrants AMD issued to two large customers, whose fair value is tied to its share price, produced a billion-dollar non-cash charge, and a $3.0 billion inventory build, ahead of a fourth quarter AMD guides much higher, left little of the quarter’s earnings in cash.

AMD Q3 2026 results at a glance

$ millions, except per share	Q3 2026	Q2 2026	Q3 2025
Revenue	13,377	11,536	9,246
Data Center	8,546	6,718	4,341
Client and Gaming	3,722	3,841	4,048
Embedded	1,109	977	857
Gross margin (GAAP)	54%	54%	52%
Operating income (GAAP)	2,832	1,990	1,270
Operating income (non-GAAP)	3,923	3,094	2,238
Net income (GAAP)	2,428	2,297	1,243
Diluted EPS (GAAP)	$1.46	$1.38	$0.75
Diluted EPS (non-GAAP)	$2.09	$1.66	$1.20
Free cash flow	554	1,558	1,530

The quarter ended on Saturday, September 26, 2026; AMD’s fiscal quarters do not end on calendar month-ends.

How did Q3 compare with AMD’s outlook?

In its Q2 release (Form 8-K, August 4), AMD guided Q3 revenue to “approximately $13 billion, plus or minus $300 million,” and non-GAAP gross margin to about 56%. Revenue of $13,377 million came in about $77 million above the top of that range (our arithmetic), and non-GAAP gross margin was 56%, as guided. CEO Lisa Su says in the release that revenue exceeded “the high end of our guidance.”

Data Center grew 97% and earns three-quarters of segment profit

Data Center revenue was $8,546 million, up 97% from a year earlier and 27% from Q2. The release attributes the growth to “strong demand for AMD EPYC processors and the launch of AMD Instinct MI450 Series GPUs.” Segment operating income was $2,882 million, up 168%, and the presentation puts the segment’s operating margin at 34%, against 25% a year earlier.

Data Center now makes up about 64% of revenue and about 74% of the three segments’ combined operating income (our arithmetic). Embedded grew 29% to $1,109 million, with operating income up 60% to $453 million. Client and Gaming went the other way: revenue fell 8% to $3,722 million and operating income 34% to $573 million. Inside it, Client revenue rose 7% to $2,949 million, while Gaming fell 40% to $773 million on “lower semi-custom and graphics revenue.”

What the customer warrants did to GAAP EPS

GAAP diluted EPS was $1.46 and non-GAAP $2.09. The largest item between them is a $1,097 million loss from the change in fair value of a warrant liability, $0.66 a share. Stock-based compensation ($0.31) and amortization of acquired intangibles ($0.32) are the usual adjustments. A $1,073 million income-tax adjustment ($0.64) goes the other way: AMD applies a normalized tax rate in its non-GAAP results, while the GAAP tax line was a $555 million benefit.

The 10-Q explains the warrants. In October 2025 and February 2026, AMD issued warrants to two customers, each allowing the purchase of up to 160 million shares at $0.01 a share. They vest in tranches as the customers hit purchase milestones and AMD’s share price meets targets, and become exercisable only after technical and commercial conditions are met. The grant-date value is booked as a reduction of revenue as the customers’ qualifying purchases are recognized, and the liability is then remeasured each quarter through other income. At September 26, the warrant liability was $1.2 billion, and $4.5 billion of unrecognized grant-date fair value remained, which the 10-Q says will be “recorded as a reduction of revenue” as qualifying revenue comes in. No warrant shares had vested or been exercised. The accounting note refers only to “two customers”; the 10-Q’s risk factors identify the warrants as issued to OpenAI OpCo., LLC and Meta Platforms, Inc., exercisable for up to a combined 320 million shares.

So the warrants touch the accounts twice: as a revenue reduction that grows with those customers’ purchases, and as a remeasurement charge that moves with AMD’s own share price. The non-GAAP reconciliation adds back the remeasurement loss; it shows no line for the revenue reduction.

Inventory absorbed $3.0B and free cash flow fell to $554M

Operating cash flow from continuing operations was $1,202 million, against $1,788 million a year earlier. Inventories used $2,995 million of cash and receivables $1,928 million, partly offset by $2,313 million more owed to suppliers. On the balance sheet, inventories rose to $11,463 million from $8,468 million at the end of Q2, about 35% (our arithmetic), and the presentation shows receivables up 26% to $9,209 million. After $648 million of capital expenditures, free cash flow was $554 million, against $1,530 million a year earlier.

The Q4 outlook gives the context: revenue of about $17 billion, which the release says is a sequential increase of about 27% at the midpoint. The inventory build is consistent with that outlook, though the filings do not tie the two together. Cash, cash equivalents and short-term investments rose to $15,776 million, helped by $4,726 million of debt proceeds, net of issuance costs, including the $4.75 billion senior notes offering the presentation says was completed in August. Total debt was $7,079 million, against $3,226 million at the end of Q2.

What AMD guides for Q4 2026

The release guides fourth-quarter revenue to approximately $17 billion, plus or minus 3%, about $16.5 billion to $17.5 billion (our arithmetic), with non-GAAP gross margin of about 55%. AMD says the midpoint represents year-over-year growth of about 66%. The presentation adds non-GAAP operating expenses of about $3.75 billion, a 13% effective tax rate and about 1.67 billion diluted shares. The share-count estimate includes potential shares for the pending World Labs and Taalas acquisitions and is “not expected to be impacted by customer warrants.”

What to watch in Q4

• The $17 billion outlook. About 27% sequential growth at the midpoint, against 16% from Q2 to Q3. In the release, Lisa Su ties the acceleration to scaling “Helios and ‘Venice’ production.”
• Gross margin. Guided to about 55% non-GAAP, a point below Q3’s 56%.
• Warrant charges. The liability is remeasured at each quarter-end, so the charge or gain depends primarily on AMD’s share price on that date (10-Q), and the $4.5 billion of unrecognized grant-date value comes off revenue as the two customers buy more.
• Inventory and cash. $3.0 billion of inventory was built in Q3. Q4 shows whether it turns into revenue and cash.
• Client and Gaming. Gaming fell 40%. The segment’s operating margin was 15%, against 21% a year earlier, per the presentation.

Quick answers

What was AMD’s revenue in Q3 2026?

Revenue was a record $13,377 million, up 45% from $9,246 million a year earlier and above the $12.7 billion to $13.3 billion range AMD had guided to. Data Center contributed $8,546 million, Client and Gaming $3,722 million and Embedded $1,109 million.

Why is AMD’s GAAP EPS lower than non-GAAP EPS?

GAAP diluted EPS was $1.46 and non-GAAP $2.09. The biggest difference is a $1,097 million ($0.66 a share) loss from remeasuring warrants AMD issued to two customers, along with stock-based compensation and acquisition amortization, partly offset by a tax adjustment.

What is AMD’s guidance for Q4 2026?

AMD expects revenue of approximately $17 billion, plus or minus 3%, which it says is about 66% year-over-year growth and a 27% sequential increase at the midpoint, with non-GAAP gross margin of about 55%.

---

Sources and method. Every Q3 figure (the income statement, the GAAP-to-non-GAAP reconciliations, segment revenue and operating income, the balance sheet, cash flows, free cash flow and the Q4 outlook) comes from Exhibit 99.1 to the Form 8-K filed 2026-11-03 (accession 0000002488-26-000188) for the quarter ended 2026-09-26, read directly from SEC EDGAR and linked above; segment operating margins, receivables growth, the senior notes, and the Q4 operating-expense, tax-rate and share-count outlook come from the presentation filed as Exhibit 99.2 to the same 8-K. The filing was accepted at 4:16 pm ET on November 3, after the US market closed; the release scheduled its call for 5:00 p.m. ET. The warrant terms, accounting and holders come from the Form 10-Q filed 2026-11-04 (accession 0000002488-26-000191). The Q3 outlook comes from the Q2 release (Form 8-K, Exhibit 99.1, accession 0000002488-26-000121).

No consensus estimate is included, so this piece makes no claim that the quarter beat or missed expectations; the only comparisons are with AMD’s own filed outlook and with prior periods. This piece makes no claim about the share-price reaction.

Our arithmetic, labelled as such: revenue $77 million above the top of the Q3 outlook ($13,377 million against $13,300 million); Data Center’s 64% share of revenue and 74% share of combined segment operating income ($2,882 million of $3,908 million); the 35% rise in inventories from the end of Q2; and the $16.5 billion to $17.5 billion Q4 range. These are approximations built on the disclosed figures, not reported numbers. All growth rates, margins and the 27% and 66% outlook figures are as printed in the release or the presentation. The interpretation (that the warrants and the inventory build, not the operating business, explain the gap between operating profit and GAAP EPS and cash flow) is our analysis, not a company statement, and is not a forecast.

Related: AMD Q2 2026, the prior quarter; NVIDIA Q2 FY2027, the other large AI accelerator supplier; and TSMC Q3 2026, which manufactures chips for both.