Advanced Micro Devices, Inc. (NASDAQ:AMD) stock fell 9.88% (As on October 30, 11:15:07 AM UTC-4, Source: Google Finance) after the company surpasses estimates for both topline and bottom-line for the third quarter of FY 24, but fourth quarter forecast disappointed investors. The chipmaker reported net income of $771 million, or 47 cents per share, compared with $299 million, or 18 cents per share, a year ago. Overall mean absolute deviation, or MAD, revenue was up 18% on an annual basis. In October, AMD announced a new artificial intelligence chip called the MI235X and said it expected the AI GPU market to be worth $500 billion by 2028. The company said on Tuesday that it expected $5 billion in AI chip sales this year, up from a previous forecast of $4.5 billion.

Further, AMD’s AI chips are reported in its data center segment, which more than doubled on an annual basis to $3.5 billion in total sales. AMD said it was mainly driven by the strong sales of its Instinct-branded GPUs for AI. Overall data center revenue was up 122% year over year. Su said that AMD still sees a lot of demand from cloud providers and other companies to build out AI infrastructure. PC sales are reported in AMD’s client segment, which grew 23% during the quarter to $1.9 billion. During the quarter, AMD’s chips were included in high-end laptops marketed by Microsoft as “Copilot+” machines that can run advanced AI included with Windows. Its gaming category slumped, with sales sliding 68% year over year, which the company blamed on a decrease in “semi-custom revenue,” which includes custom chips for game consoles such as the Sony PlayStation 5.

AMD in the third quarter of FY 24 has reported the adjusted earnings per share of 92 cents, beating the analysts’ estimates for the adjusted earnings per share of 91 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 22 percent to $6.82 billion in the third quarter of FY 24, beating the analysts’ estimates for revenue by 1.59%. AMD’s gross margin expanded to 54%, which the company said was because of higher data center revenue.

AMD said it expected about $7.5 billion in sales in the current quarter, in line with consensus expectations of $1.16 in adjusted earnings per share on $7.54 billion in revenue. That would be a 22% year-over-year decline for the December quarter.