Q3 2026 · the quarter AMD reports
Sales
PricedIn$13.2B$12.7B – $13.8B
$12.7B$12.9B$13.2B$13.6B$13.8B
adjusted EPS
PricedIn$1.98$1.78 – $2.18
$1.78$1.88$1.98$2.07$2.18
Middlethe forecast50% range1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside.80% range1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number.
The seven analysts nearly agree: all put sales a little above the middle of AMD's outlook, with data center carrying the growth and gaming falling. Analyst D sits at the top of the outlook range, while Analyst A is lowest on earnings because it keeps other income near the guide and takes a larger tax charge. The real spread is in cash, where views on inventory and supplier prepayments differ widely.
The analysts expect third-quarter sales of about $13.2B, a small beat of AMD's outlook, as server processors lead.
Sales$13.2B+43% on Q3 2025 ($9.2B)50% range$12.9B – $13.6B80% range$12.7B – $13.8B
Adjusted EPS$1.98+65% on Q3 2025 ($1.20)50% range$1.88 – $2.0780% range$1.78 – $2.18
Investment and cash generation
Base case
Capital spending$850M
Free cash flow$2.25B
Free cash flow: operating cash flow less capital spending.
Cash capital spending of $850,000,000.00 in the analysts' middle mainly buys equipment AMD consigns to suppliers to make server processors, chiefly Venice; it adds capacity for 2027 more than this quarter. Free cash flow here is operating cash flow less capital spending, the same basis AMD uses. Operating cash flow of $3.1B leaves free cash flow of $2.2B, held down by inventory, receivables and supplier prepayments for the fourth-quarter rack ramp.3 of 7
- Analyst EThe primary increase of our CapEx is to build the capacity to support the server CPU ramp, especially Venice.
- Analyst FFourth-quarter non-GAAP gross margin set at 55 percent, below the third quarter's 56.2; capex rises to about 1 billion a quarter for consignment equipment.
- Analyst GMy assumed inventory and supply-prepayment build is large and uncertain; it is not a disclosed cash target.
AMD reports the third quarter on 3 November after the close. The analysts expect sales of $13.2B, sales growth on a year earlier of +43% and sales growth on the second quarter of +14%. Adjusted earnings per share of $1.98 would mean earnings growth on a year earlier of +65%.
In August AMD gave an outlook range for the quarter and said its new Helios rack would only start shipping at the very end of it. In October it said production shipments began in September, with first systems installed at OpenAI, Meta, Microsoft, Oracle and Anthropic.
Data center carries the quarter. The analysts put data center sales at $8.3B, against data center sales of $4.3B a year earlier, mostly from server processors in strong demand. Client and gaming sales sit near $3.8B as memory costs weigh on PCs and consoles, and embedded sales near $1.1B.
The analysts barely differ on sales or earnings: all seven place sales slightly above the middle of AMD's range, because the company has beaten that middle in each of the last four quarters. Cash is where they part. Analyst G's free cash flow is $475,000,000.00 and Analyst E's free cash flow is $2.5B, depending on how much inventory and supplier prepayment the ramp absorbs.
Adjusted earnings per share of $1.98 builds from sales just above the outlook middle, the guided adjusted gross margin, operating costs near the guide, the guided tax rate and a share count near the guide, with no customer warrant shares counted.
The company's outlooks
Q1 2025guided “approximately $7.1 billion”
Q2 2025guided “approximately $7.4 billion”
Q3 2025guided “approximately $8.7 billion”
Q4 2025guided “approximately $9.6 billion”
Q1 2026guided “approximately $9.8 billion”
Q2 2026guided “approximately $11.2 billion”
Q3 2026guided “approximately $13 billion”
Each outlook is the one the company gave before the quarter, in its own words. It is on another measure than the reported sales line, so it is not set against the result.
The quarter forecast, line by line
The lines as the company's statement shows them. The forecast columns are the tab's PricedIn forecast, one analyst's whole plan, the analyst nearest the middle of the seven on both sales and earnings per share, so the lines add up to the numbers above. Sales growth is the change on the same quarter a year earlier. Earnings per share is the headline's: the company's own for the reported quarter, and for a forecast quarter that analyst's own, worked from its lines with the company's adjustments. GAAP EPS is net income over diluted shares; under it, each adjustment is its effect on net income after tax, to adjusted net income and the adjusted figure: for a forecast as that analyst states it, for a reported period from the company's own table where we hold it, and — where we do not.
Quarterly operating cash flow, in millions of dollars
Q2 2026$2,366.00
Q1 2026$2,955.00
Q2 2025$1,462.00
Where each number comes from
- Q2 2026
GAAP net cash provided by operating activities of continuing operations $ 2,366 $ 2,955 $ 1,462 $ 5,321 $ 2,401
- Q1 2026
GAAP net cash provided by operating activities of continuing operations $ 2,366 $ 2,955 $ 1,462 $ 5,321 $ 2,401
- Q2 2025
GAAP net cash provided by operating activities of continuing operations $ 2,366 $ 2,955 $ 1,462 $ 5,321 $ 2,401
Operating cash flow from continuing operations fell in the second quarter as receivables, inventory and supplier prepayments grew with the ramp.
What it rests on
- Third-quarter sales outlook
- A range whose midpoint sits a little below the analysts' forecast
For the third quarter of 2026, AMD expects revenue to be approximately $13 billion, plus or minus $300 million.
AMD second-quarter earnings release - Adjusted gross margin outlook
- Guided for the quarter in August, before Helios volume
In addition, we expect third quarter non-GAAP gross margin to be approximately 56%.
Second-quarter earnings call - Helios shipments
- Production shipments began in September at five lead customers
We started shipping production in September. The first systems are installed at our leading customers, OpenAI, Meta, Microsoft, Oracle, Anthropic.
AMD keynote, October 2026 - Gaming outlook
- Second-half gaming sales down sharply from the first half
We now expect second half gaming revenue to decline more than 20% compared
First-quarter earnings call - Capital spending purpose
- Mainly capacity for the Venice server processor ramp
The primary increase of our CapEx is to build the capacity to support the server CPU ramp, especially Venice.
Finance chief, September 2026 conference
Scenarios Explained: Base, Low, and High
Basethe middle forecast
Q3-2026
Sales$13.2B
Adjusted EPS$1.98
Capital spending$850M
Free cash flow$2.25B
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| Net income | $2.38B |
|---|
| Stock-based compensation, depreciation, and intangible amortization | $1.30B |
|---|
| Other non-cash operating items and deferred income taxes | −$29.0M |
|---|
| Changes in working capital (accounts receivable, inventories, prepaid supply agreements, and payables) | −$550M |
|---|
| Operating cash flow | $3.10B |
|---|
| Less capital spending | −$850M |
|---|
| Free cash flow | $2.25B |
|---|
- Net income
- Forecast third quarter 2026 GAAP net income of 2,378 million dollars from the quarter plan, consistent with non-GAAP net income of 3,289 million dollars and adjusted earnings per share of 1.98 dollars.
- Stock-based compensation, depreciation, and intangible amortization
- Sum of third quarter stock-based compensation (525 million dollars), acquisition-related intangible amortization (536 million dollars), and property and equipment depreciation and amortization (240 million dollars).
- Other non-cash operating items and deferred income taxes
- Forecast deferred tax benefits and non-cash equity income in investee.
- Changes in working capital (accounts receivable, inventories, prepaid supply agreements, and payables)
- Net working capital outflow from higher accounts receivable on 14.4 percent sequential revenue growth and inventory build ahead of fourth-quarter Helios shipments, partially offset by accounts payable.
Capital spending
Third quarter 2026 capital spending is forecast at 850 million dollars, up modestly from 808 million dollars in the second quarter of 2026 as the company invests in consigned equipment for the Venice server processor ramp. Because the company does not guide capital spending by asset class, we allocate 580 million dollars to Equipment and 90 million dollars to Land, building and leasehold improvements based on Note 3 categories and CFO commentary, leaving 180 million dollars unallocated for construction in progress and cash payment timing.
| Equipment | $580M |
|---|
| Land, building and leasehold improvements | $90.0M |
|---|
| Unallocated capital spending | $180M |
|---|
| Total capital spending | $850M |
|---|
Equipment Model estimate for third quarter 2026 equipment spending, reflecting continued purchases of consigned wafer test and packaging equipment to support the Venice server processor and Helios ramps.
Equipment 4,127 3,453
We need to build ourselves to buy the equipment to do the consignment to support the ramp.
Land, building and leasehold improvements Model estimate for third quarter 2026 engineering lab and facility leasehold improvements.
Land, building and leasehold improvements $ 1,068 $ 967
GAAP net cash provided by operating activities of continuing operations $ 2,366 $ 2,955 $ 1,462 $ 5,321 $ 2,401
Purchases of property and equipment (808) (389) (282) (1,197) (494)
We talk about our CapEx increase. The primary increase of our CapEx is to build the capacity to support the server CPU ramp, especially Venice. As Matt talked about, we do see very significant ramp next year and that actually, our capacity is not enough. We need to build ourselves to buy the equipment to do the consignment to support the ramp.
Three ways the base case happens
These levers explain the outcome together.
- Sales land modestly above the middle of AMD's outlook. AMD has beaten the middle of its quarterly outlook in each of the last four quarters. Puts third-quarter sales a little above the outlook middle and earnings per share a few cents above what the guidance arithmetic gives; capital spending is unaffected.
WatchThird-quarter sales above the outlook middle in the 3 November release.
Analyst reasoning
- Analyst FThird quarter beats the 13 billion dollar guide midpoint by about 2 to 3 percent as in recent quarters, at about 56 percent non-GAAP gross margin
- Analyst Ca modest beat of the 13.0 billion guide, in line with the beats of the last four quarters
- Server processors, not Helios, carry this quarter's data center growth. Helios production shipments only began in September, while server demand has been running ahead of supply. Data center supplies almost all the sequential gain; Helios adds only a sliver, so the mix stays rich in high-margin server processors this quarter.
WatchManagement describing Helios revenue as initial on the 3 November call.
Analyst reasoning
- Analyst FOnly a small Helios contribution in the third quarter; most of the beat comes from server and MI355.
- Analyst DThe Helios ramp is just starting at the end of Q3, and it will be much more
- Adjusted margin and costs track the August guidance. AMD guided adjusted gross margin, operating costs, tax rate and share count for the quarter. Keeps earnings per share close to the guidance arithmetic plus the sales beat; interest on the August notes trims other income slightly.
WatchAdjusted gross margin in the release at or above the guided level.
Analyst reasoning
- Analyst GMy $13.25 billion sales estimate is slightly above guidance midpoint, with adjusted gross margin of 56% and adjusted operating expenses of $3.7 billion, modestly above management's $3.65 billion outlook.
- Analyst FAbout 4.75 billion dollars of new notes at 4.6 to 5.5 percent add about 60 million of quarterly interest, partly offset by interest income on the cash; interest expense set at 63 and 97 million in the third and fourth quarters, and net other income near the 55 million guide.
Sales of about $13.2B need data center sales near $8.3B, with server processors still growing fast and only first Helios shipments in late September. Client and gaming sales must hold near $3.8B despite memory costs, and embedded sales near $1.1B. Adjusted earnings per share of $1.98 then needs the guided adjusted gross margin, which Analyst C puts at +56%, and operating costs close to the guide.
Highabout 1 chance in 10 of better
Q3-2026
Sales$13.8B+5% vs base
Adjusted EPS$2.18+10% vs base
Capital spending$1.05B
Free cash flow$2.13B
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| GAAP net income | $2.46B |
|---|
| Depreciation and amortization | $235M |
|---|
| Amortization of acquisition-related intangibles | $544M |
|---|
| Stock-based compensation | $525M |
|---|
| Deferred income taxes | −$30.0M |
|---|
| Other non-cash items | $25.0M |
|---|
| Accounts receivable | −$950M |
|---|
| Inventories | −$200M |
|---|
| Prepaid expenses and other assets | −$80.0M |
|---|
| Accounts payable | $500M |
|---|
| Accrued and other liabilities | $151M |
|---|
| Operating cash flow | $3.18B |
|---|
| Less capital spending | −$1.05B |
|---|
| Free cash flow | $2.13B |
|---|
- GAAP net income
- Tied to the high case's $13.65 billion of sales and $2.10 of adjusted earnings per share.
- Depreciation and amortization
- Grows with the property base.
- Amortization of acquisition-related intangibles
- At the recent quarterly rate.
- Stock-based compensation
- Grows with the larger organisation.
- Deferred income taxes
- Small deferred tax use.
- Other non-cash items
- Removal of equity method income and small charges.
- Accounts receivable
- Receivables grow faster with the bigger quarter.
- Inventories
- Inventory builds modestly.
- Prepaid expenses and other assets
- Supplier prepayments.
- Accounts payable
- Payables expand with purchases.
- Accrued and other liabilities
- Accruals grow with expenses.
Capital spending
No disclosed categories; the full amount is unallocated and slightly higher with the faster ramp.
| Unallocated capital spending | $1.05B |
|---|
| Total capital spending | $1.05B |
|---|
Customer pull for Helios is very strong and tracking ahead of our initial forecasts.
Three ways the high case happens
These levers explain the outcome together; each is not a separate one-in-ten event.
- More Helios racks ship before the quarter closes. Management said customer pull for Helios was tracking ahead of its initial forecasts. Adds rack sales at quarter-end, lifting sales and earnings per share; receivables rise with late shipments, so cash gains less than earnings.
WatchData center sales above the analysts' level in the 3 November release.
Analyst reasoning
- Analyst AHelios ships earlier and in greater volume than planned, server CPU supply keeps improving, and revenue lands at the top of guidance with gross margin near 56.8%.
- Analyst GFaster accelerator and customer-infrastructure ramps
- Extra server processor supply arrives sooner. Demand for server processors exceeds supply, and AMD is adding wafer and packaging capacity. Raises data center sales with a high-margin mix, so earnings per share rises faster than sales.
WatchManagement saying server supply improved during the quarter.
Analyst reasoning
- Analyst FSupply upside on server CPUs and a faster Helios ramp
- Analyst AData center revenue above $8.5 billion as Helios and Venice both ramp
- Embedded grows faster while operating costs stay at the guide. Embedded demand is recovering across networking, test, aerospace and defense customers. Adds high-margin embedded sales while costs hold, widening operating margin and lifting earnings per share.
WatchEmbedded sales above the analysts' level in the release.
Analyst reasoning
- Analyst AEmbedded grows faster than planned on networking and aerospace demand
- Analyst AOperating expenses stay near $3.65 billion, giving more operating leverage
Sales near $13.8B and adjusted earnings per share near $2.18 would need the top of AMD's outlook range or more: more Helios racks shipped in September, extra server processor supply, embedded demand stronger than planned and costs held at the guide. Analyst C's high sales reach $14.0B, with Analyst D as high. Analyst G's high earnings per share reach $2.25, further than the rest, as it lets faster shipments and a better mix lift margin together.
Customer demand for Helios was described in August as tracking ahead of AMD's initial forecasts, but most rack revenue was always planned for the fourth quarter, which limits how far this quarter can run.
The seven highs run from $13.7B (Analyst A) to $14.0B (Analyst D).
First sign3 November 2026: third-quarter sales above the top of AMD's outlook range.
Lowabout 1 chance in 10 of worse
Q3-2026
Sales$12.7B−4% vs base
Adjusted EPS$1.78−10% vs base
Capital spending$850M
Free cash flow$1.55B
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| Net income | $1.90B |
|---|
| Stock-based compensation, depreciation and acquisition amortization | $1.20B |
|---|
| Inventory and receivables | −$700M |
|---|
| Operating cash flow | $2.40B |
|---|
| Less capital spending | −$850M |
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| Free cash flow | $1.55B |
|---|
- Net income
- Lower sales and margin in the low case produce lower earnings than the base.
- Stock-based compensation, depreciation and acquisition amortization
- These non-cash charges continue even if revenue misses.
- Inventory and receivables
- A missed ramp still leaves inventory that was built for demand.
Capital spending
All of the low-case capital spending is purchases of property and equipment, the category the company reports. The amount is a forecast, not a company plan.
| Purchases of property and equipment | $850M |
|---|
| Unallocated capital spending | $0 |
|---|
| Total capital spending | $850M |
|---|
Purchases of property and equipment Capacity equipment for the server ramp still has to be paid even if shipments slip.
Purchases of property and equipment (1,197) (494)
purchases of property and equipment of $1.2 billion
Three ways the low case happens
These levers explain the outcome together; each is not a separate one-in-ten event.
- Late-September Helios shipments slip into the fourth quarter. First rack shipments were timed for the final weeks of the quarter, leaving little room for delay. Removes the small Helios contribution from third-quarter sales and leaves components in inventory, lowering operating cash flow; earnings per share falls with the missing sales.
WatchManagement saying on 3 November that recognized Helios revenue came in below plan.
Analyst reasoning
- Analyst AHelios rack shipments slip toward the end of the quarter and the memory shortage pushes costs and limits PC and gaming demand, so revenue lands near the bottom of guidance and gross margin gives back a little.
- Analyst Brack-scale ODM manufacturing qualification bottlenecks on complex 72-GPU Helios systems
- Server processor supply stays short of demand. Server growth is mostly unit growth, so it depends on wafers and packaging from outside suppliers. Caps data center sales below the analysts' middle despite strong demand; sales and earnings per share fall together.
WatchManagement citing supply limits on server processors on the 3 November call.
Analyst reasoning
- Analyst FServer growth is mostly units, so growth depends on supply; supply is a low-case driver.
- Analyst CServer CPU supply additions (TSMC wafers, advanced packaging) catching up with demand
- Memory costs cut PC and console demand and shave margin. An industry-wide memory shortage is raising system costs; AMD already planned a softer second-half PC market. Lowers client and gaming sales and trims adjusted gross margin, so earnings per share falls faster than sales.
WatchClient and gaming sales below the second quarter's level in the release.
Analyst reasoning
- Analyst ANon-GAAP gross margin slips to about 55.5% on mix and component cost
- Analyst GConsumer weakness and a less favorable product mix reduce reported margins while committed inventory and prepayments still consume cash.
- Analyst DPersonal computer and gaming demand falls further as memory prices stay high
Sales near $12.7B and adjusted earnings per share near $1.78 would need the bottom of AMD's outlook range: late-September Helios shipments slipping, server supply staying short, and memory costs cutting PC and console demand while trimming margin. Analyst C's low sales reach $12.6B, with Analyst B as low. Analyst G's low earnings per share reach $1.70, further than the rest, because it alone adds a weaker product mix and lower margins on top of the slower ramp.
In each of the last four quarters AMD's sales landed above the middle of its outlook, and the October keynote confirmed rack shipments started on time, so a result at the bottom of the range would break that pattern.
The seven lows run from $12.6B (Analyst B) to $12.8B (Analyst A).
First sign3 November 2026: data center sales well short of $8.3B in the release.
Surfaced outlier views
For Q3-2026 the seven analysts sit within 0.8% of the PricedIn number on sales and within 2.0% on adjusted EPS. The furthest, and why:
Analyst D · Q3-2026: sales $13.3B, the highest of the seven (PricedIn $13.2B)
WhyAnalyst D puts data center sales at $8.4B and embedded sales at $1.2B, both at the top of the group, reading September's shipments as confirming the top of the outlook. It also has the lowest research cost, Analyst D's research and development at $2.6B against PricedIn research and development of $2.8B, which lifts its earnings too.
The company lands at the top of the August revenue range, about 13.3 billion dollars, because the new rack is only starting at the end of the quarter.
Analyst A · Q3-2026: adjusted EPS $1.94, the lowest of the seven (PricedIn $1.98)
WhyAnalyst A builds the quarter straight from the guidance arithmetic. Analyst A's other income is $57,000,000.00 against PricedIn other income of $108,000,000.00, and Analyst A's tax charge is $336,000,000.00 against a PricedIn tax charge of $311,000,000.00, so less of similar sales reaches earnings per share.
It gave the September-quarter guide of $13 billion plus or minus $300 million, non-GAAP gross margin near 56%, operating expenses near $3.65 billion, other income near a $55 million gain, a 13% tax rate and 1.66 billion diluted shares, which together set my third-quarter plan.
Watch
3 November after the close: data center sales against $8.3B, the adjusted gross margin against the guide, and the fourth-quarter outlook. A data center beat with margin held points higher; weak client and gaming sales or a Helios delay points lower.
Q4 2026 · the quarter after
Sales
PricedIn$15.5B$13.9B – $16.8B
$13.9B$14.6B$15.5B$16.0B$16.8B
adjusted EPS
PricedIn$2.46$1.95 – $2.84
$1.95$2.18$2.46$2.60$2.84
Middlethe forecast50% range1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside.80% range1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number.
The analysts agree the fourth quarter is a large step led by Helios, with a slightly lower margin. They differ on its size: Analyst G sees the biggest data center jump and a much weaker client and gaming business, while Analyst D sees the smallest sales step and higher costs. Cash views differ even more, from heavy receivables in some analysts' walks to lighter working capital in others.
The analysts expect fourth-quarter sales of about $15.5B as Helios racks ramp into volume.
Sales$15.5B+51% on Q4 2025 ($10.3B)50% range$14.6B – $16.0B80% range$13.9B – $16.8B
Adjusted EPS$2.46+61% on Q4 2025 ($1.53)50% range$2.18 – $2.6080% range$1.95 – $2.84
Investment and cash generation
Base case
Capital spending$900M
Free cash flow$2.90B
Free cash flow: operating cash flow less capital spending.
Cash capital spending of $900,000,000.00 in the analysts' middle keeps buying consigned equipment for the Venice server ramp, capacity that mainly serves 2027. Free cash flow is operating cash flow less capital spending, as AMD defines it. Operating cash flow of $3.8B leaves free cash flow of $2.9B; receivables from late-quarter rack shipments and inventory for 2027 absorb much of the profit. Analyst D's cash capital spending of $1.5B is the highest.3 of 7
- Analyst FFourth-quarter non-GAAP gross margin set at 55 percent, below the third quarter's 56.2; capex rises to about 1 billion a quarter for consignment equipment.
- Analyst AThat set both my revenue shape and my capital spending path.
- Analyst GEquipment investment stays high; my base capital spending is $850 million in the third quarter, $1.05 billion in the fourth, $4.5 billion in 2027 and $5.5 billion in 2028.
The fourth quarter is where AMD's Helios rack is meant to scale. The analysts expect sales of $15.5B, sales growth on a year earlier of +51% and sales growth on the third quarter of +17%, with adjusted earnings per share of $2.46. AMD gives its outlook for this quarter with the 3 November release.
Management said in September that the fourth quarter would see a very significant step up in Helios revenue, followed by another in the first quarter of 2027. It also said gross margin would be slightly lower than the third quarter's as the MI450 accelerator ramps, partly offset by server and embedded sales.
The analysts put data center sales at $10.5B, carried by Helios racks for OpenAI, Meta and others and by server processors still growing fast. Client and gaming sales stay near $3.8B, with console sales still falling on memory costs.
The spread is wider than for the third quarter because the size of the step is a judgement. Analyst G sees the biggest data center jump; Analyst D the smallest sales step with the highest costs. Rack timing at customer sites, power and partner qualification decide which is closer.
Earnings per share of $2.46 comes from the larger sales step, an adjusted gross margin slightly lower as accelerators grow, operating costs rising slower than sales, higher interest on the August notes and a steady share count with no warrant shares.
What it rests on
- Fourth-quarter step-up
- Helios revenue steps up very significantly, then again in early 2027
shipment. We expect revenue in Q3, but Q4 will see a very significant step up, and then another step up in Q1
Finance chief, September 2026 conference - Margin as MI450 ramps
- Gross margin slightly below the third quarter's guided level
In general, the way to think about it is when we ramp MI450 in Q4 and 2027, the gross margin will be slightly lower than what we guided the Q3.
Finance chief, September 2026 conference - Second-half server growth
- Server sales growth accelerating in the second half
revenue to grow more than 80% year-over-year in the second half of 2026, and more than 70% for the full year 2027
Second-quarter earnings call - New debt
- Senior notes sold in August, raising interest costs
closed its public offering (the “Offering”) of $4.75 billion aggregate principal amount of senior notes
August 2026 notes filing
Scenarios Explained: Base, Low, and High
Basethe middle forecast
Q4-2026
Sales$15.5B
Adjusted EPS$2.46
Capital spending$900M
Free cash flow$2.90B
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| Net income | $3.18B |
|---|
| Stock-based compensation, depreciation, and intangible amortization | $1.33B |
|---|
| Other non-cash operating items and deferred income taxes | −$37.0M |
|---|
| Changes in working capital (accounts receivable, inventories, prepaid supply agreements, and payables) | −$670M |
|---|
| Operating cash flow | $3.80B |
|---|
| Less capital spending | −$900M |
|---|
| Free cash flow | $2.90B |
|---|
- Net income
- Forecast fourth quarter 2026 GAAP net income of 3,181 million dollars from the quarter plan, consistent with non-GAAP net income of 4,096 million dollars and adjusted earnings per share of 2.46 dollars.
- Stock-based compensation, depreciation, and intangible amortization
- Sum of fourth quarter stock-based compensation (540 million dollars), acquisition-related intangible amortization (526 million dollars), and property and equipment depreciation and amortization (260 million dollars).
- Other non-cash operating items and deferred income taxes
- Forecast deferred tax benefits and non-cash equity income in investee.
- Changes in working capital (accounts receivable, inventories, prepaid supply agreements, and payables)
- Net working capital investment in accounts receivable and inventories as revenue expands by 2.27 billion dollars sequentially during the fourth-quarter Helios and Venice ramp.
Capital spending
Fourth quarter 2026 capital spending is forecast at 900 million dollars as consigned equipment purchases continue ahead of the 2027 Data Center doubling. We allocate 620 million dollars to Equipment and 95 million dollars to Land, building and leasehold improvements based on Note 3 categories and CFO commentary, leaving 185 million dollars unallocated for construction in progress and payment timing.
| Equipment | $620M |
|---|
| Land, building and leasehold improvements | $95.0M |
|---|
| Unallocated capital spending | $185M |
|---|
| Total capital spending | $900M |
|---|
Equipment Model estimate for fourth quarter 2026 equipment purchases to expand consigned packaging and wafer test capacity for the 2027 Venice and Helios ramps.
Equipment 4,127 3,453
We need to build ourselves to buy the equipment to do the consignment to support the ramp.
Land, building and leasehold improvements Model estimate for fourth quarter 2026 engineering lab and facility leasehold improvements.
Land, building and leasehold improvements $ 1,068 $ 967
Purchases of property and equipment (808) (389) (282) (1,197) (494)
We talk about our CapEx increase. The primary increase of our CapEx is to build the capacity to support the server CPU ramp, especially Venice. As Matt talked about, we do see very significant ramp next year and that actually, our capacity is not enough. We need to build ourselves to buy the equipment to do the consignment to support the ramp.
Three ways the base case happens
These levers explain the outcome together.
- Helios racks move from first shipments into volume. Management called the fourth-quarter step very significant after September's first production shipments. Supplies most of the sequential sales gain and gross profit dollars; receivables rise as racks ship late in the quarter, so cash lags earnings.
WatchAMD's fourth-quarter outlook on 3 November implying a large data center step.
Analyst reasoning
- Analyst CHelios first shipments in September with a significant Q4 step-up to about 15.4 billion
- Analyst FHelios steps up sharply in the fourth quarter at a slightly lower margin
- Server processor sales keep growing very fast. Management guided server growth to accelerate in the second half as the Venice generation launches. Adds high-margin data center sales that offset the lower accelerator margin, keeping adjusted gross margin close to the third quarter's.
WatchManagement repeating its second-half server outlook on 3 November.
Analyst reasoning
- Analyst BRapid scaling of sixth-generation EPYC Venice server processors on two-nanometer technology alongside fifth-generation EPYC Turin across cloud and enterprise workloads, driving over 80 percent year-over-year server processor growth in the second half of 2026 and over 70 percent growth in 2027.
- Analyst EEPYC server demand and expanding 2027 supply
- Accelerator mix trims margin while costs grow slower than sales. MI450 carries a gross margin a little below the company average; management targets gross profit outgrowing expenses. Gross margin dips slightly, but operating profit grows faster than sales; new debt interest takes a little off earnings per share.
WatchA fourth-quarter adjusted gross margin outlook slightly below the third quarter's.
Analyst reasoning
- Analyst AI hold December at a 55.6% non-GAAP gross margin, slightly below the 56% guided for September, and 2027 at 55.3%, inside the company's 55% to 58% band.
- Analyst GExpenses rise more slowly than sales over time
Sales of about $15.5B need data center sales near $10.5B: Helios moving from first shipments into volume and server processors still growing very fast. Client and gaming sales must hold near $3.8B despite falling console sales. Adjusted earnings per share of $2.46 needs gross margin only slightly below the third quarter's and operating costs growing slower than sales.
Highabout 1 chance in 10 of better
Q4-2026
Sales$16.8B+9% vs base
Adjusted EPS$2.84+15% vs base
Capital spending$1.35B
Free cash flow$2.80B
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| GAAP net income | $3.39B |
|---|
| Depreciation and amortization | $245M |
|---|
| Amortization of acquisition-related intangibles | $544M |
|---|
| Stock-based compensation | $540M |
|---|
| Deferred income taxes | −$20.0M |
|---|
| Other non-cash items | $20.0M |
|---|
| Accounts receivable | −$900M |
|---|
| Inventories | −$300M |
|---|
| Prepaid expenses and other assets | −$100M |
|---|
| Accounts payable | $400M |
|---|
| Accrued and other liabilities | $331M |
|---|
| Operating cash flow | $4.15B |
|---|
| Less capital spending | −$1.35B |
|---|
| Free cash flow | $2.80B |
|---|
- GAAP net income
- Tied to the high case's $16.2 billion of sales and $2.67 of adjusted earnings per share.
- Depreciation and amortization
- Grows with the property base.
- Amortization of acquisition-related intangibles
- At the recent quarterly rate.
- Stock-based compensation
- Grows with the organisation.
- Deferred income taxes
- Small deferred tax use.
- Other non-cash items
- Removal of equity method income.
- Accounts receivable
- Receivables grow with the bigger quarter.
- Inventories
- Inventory builds.
- Prepaid expenses and other assets
- Supplier prepayments.
- Accounts payable
- Payables expand.
- Accrued and other liabilities
- Accruals grow with expenses.
Capital spending
No disclosed categories; the full amount is unallocated and higher with the faster ramp.
| Unallocated capital spending | $1.35B |
|---|
| Total capital spending | $1.35B |
|---|
Customer pull for Helios is very strong and tracking ahead of our initial forecasts.
Three ways the high case happens
These levers explain the outcome together; each is not a separate one-in-ten event.
- Racks qualify faster and customers accept more systems. First systems were installed at OpenAI, Meta, Microsoft, Oracle and Anthropic by October. Pulls more accelerator sales into the quarter, raising sales and earnings per share; receivables climb with late shipments, so cash rises less.
WatchA fourth-quarter outlook on 3 November above the analysts' middle.
Analyst reasoning
- Analyst Ffaster rack qualification and data-center readiness
- Analyst GFaster accelerator and customer-infrastructure ramps
- Extra server supply arrives. AMD is buying consigned equipment to expand server processor capacity. Adds high-margin server sales, holding gross margin near the third quarter's and lifting earnings per share.
WatchManagement saying server supply is improving faster than planned.
Analyst reasoning
- Analyst Fextra wafer and packaging supply for Venice
- Analyst GAdditional server supply and share gains
- Operating costs grow much slower than gross profit. Management targets gross profit dollars growing very significantly faster than expenses. Turns more of the extra sales into operating profit, so earnings per share rises faster than sales.
WatchA fourth-quarter operating cost outlook rising less than sales.
Analyst reasoning
- Analyst GOperating expenses grow much slower than gross profit
- Analyst Foperating leverage
Sales near $16.8B and adjusted earnings per share near $2.84 would need racks qualified faster, customers accepting more MI450 systems, extra server supply and margin held by server mix. Analyst G goes furthest, with high sales of $18.0B and high earnings per share of $3.20, because its base already carries the biggest data center step and it adds faster customer acceptance on top.
AMD said customer pull for Helios was tracking ahead of its initial forecasts, and first systems were installed at five lead customers by October.
The seven highs run from $16.2B (Analyst A) to $18.0B (Analyst G).
First sign3 November 2026: a fourth-quarter sales outlook above $15.5B with margin guided near the third quarter's.
Lowabout 1 chance in 10 of worse
Q4-2026
Sales$13.9B−10% vs base
Adjusted EPS$1.95−21% vs base
Capital spending$1.10B
Free cash flow$1.77B
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| GAAP net income | $2.38B |
|---|
| Depreciation and amortization | $240M |
|---|
| Amortization of acquisition-related intangibles | $544M |
|---|
| Stock-based compensation | $525M |
|---|
| Deferred income taxes | −$20.0M |
|---|
| Other non-cash items | $15.0M |
|---|
| Accounts receivable | −$800M |
|---|
| Inventories | −$350M |
|---|
| Prepaid expenses and other assets | −$100M |
|---|
| Accounts payable | $300M |
|---|
| Accrued and other liabilities | $136M |
|---|
| Operating cash flow | $2.87B |
|---|
| Less capital spending | −$1.10B |
|---|
| Free cash flow | $1.77B |
|---|
- GAAP net income
- Tied to the low case's $13.9 billion of sales and $1.90 of adjusted earnings per share.
- Depreciation and amortization
- Grows with the property base.
- Amortization of acquisition-related intangibles
- At the recent quarterly rate.
- Stock-based compensation
- Grows modestly.
- Deferred income taxes
- Small deferred tax use.
- Other non-cash items
- Removal of equity method income.
- Accounts receivable
- Receivables grow with the smaller quarter.
- Inventories
- Inventory still builds for the ramp.
- Prepaid expenses and other assets
- Supplier prepayments.
- Accounts payable
- Payables expand.
- Accrued and other liabilities
- Accruals grow with expenses.
Capital spending
No disclosed capital spending categories; the full amount is unallocated and trimmed with the softer quarter.
| Unallocated capital spending | $1.10B |
|---|
| Total capital spending | $1.10B |
|---|
there is currently an industry-wide memory shortage as the demand for such components has outpaced supply
Three ways the low case happens
These levers explain the outcome together; each is not a separate one-in-ten event.
- Rack shipments wait on customer power and qualification. Helios is a first-generation rack; AMD's risk factors name data center power and construction delays. Shifts part of the step-up into 2027, cutting sales and earnings per share; rack components sit in inventory, lowering operating cash flow.
WatchA fourth-quarter outlook on 3 November implying only a small data center step.
Analyst reasoning
- Analyst FHelios shipments slip so that the fourth-quarter step-up is small and the 2027 ramp is paced by customers' data-center power and build-outs
- Analyst DHelios yields and customer data-center readiness push most of the rack ramp out of 2026, server supply stays tight, and memory costs cut personal-computer and console demand harder than the August outlook assumed.
- Server supply stays tight through year-end. Wafers and advanced packaging are the binding limit on server unit growth. Holds server sales below plan, removing high-margin sales and cutting earnings per share faster than sales.
WatchManagement describing server shipments as supply-limited on 3 November.
Analyst reasoning
- Analyst DServer processor growth slows because wafers and packaging stay short
- Analyst CServer CPU supply additions (TSMC wafers, advanced packaging) catching up with demand
- Memory costs deepen the PC and console slump. Gaming was already planned sharply lower in the second half on memory and component costs. Lowers client and gaming sales and adds cost pressure on margin, a smaller hit to earnings than a rack delay.
WatchA client and gaming outlook below the third quarter's level.
Analyst reasoning
- Analyst DPersonal computer and gaming demand falls further as memory prices stay high
- Analyst Eweaker personal-computer and console demand
Sales near $13.9B and adjusted earnings per share near $1.95 would need Helios racks to wait on customer power or partner qualification, server supply to stay short and memory costs to cut PCs and consoles harder. Analyst D goes furthest, with low sales of $13.5B and low earnings per share of $1.85, because it alone pushes most of the rack ramp out of 2026 rather than trimming it.
A first rack-scale product is harder to ship than a chip; several analysts note that rivals' first rack launches took quarters to reach volume, even though AMD says production started on time in September.
The seven lows run from $13.5B (Analyst D) to $14.4B (Analyst G).
First sign3 November 2026: a fourth-quarter sales outlook whose middle sits well below $15.5B.
Surfaced outlier views
For Q4-2026 the seven analysts sit within 3.4% of the PricedIn number on sales and within 6.5% on adjusted EPS. The furthest, and why:
Analyst G · Q4-2026: sales $16.0B, the highest of the seven (PricedIn $15.5B)
WhyAnalyst G puts data center sales at $11.7B, the most of any analyst, against PricedIn data center sales of $10.5B, treating this as the first full quarter of accelerator volume. It partly offsets that with the weakest client and gaming business, Analyst G's client and gaming sales at $3.1B, and a heavier tax charge, Analyst G's tax at $600,000,000.00.
The base moves from about $13.3 billion in the third quarter to $16 billion in the fourth as the new accelerator platform scales.
Analyst D · Q4-2026: adjusted EPS $2.30, the lowest of the seven (PricedIn $2.46)
WhyAnalyst D has the smallest sales step of the group and higher spending. Analyst D's marketing and administration cost is $1.7B against a PricedIn marketing and administration cost of $1.6B, leaving Analyst D's operating income at $3.2B against PricedIn operating income of $3.5B.
That sets the fourth-quarter sales step-up and a small margin dip.
Watch
3 November: AMD's fourth-quarter sales outlook against $15.5B and its margin guide. Then the fourth-quarter release early in 2027: data center sales against $10.5B. A large data center step points higher; a small one, or margin falling more than slightly, points lower.