$48.8 Billion of Promises Behind AMD Stock’s 11% Friday Jump

AMD rose about 8 percent in morning trading on Monday, to about $485, hours after Oppenheimer raised the stock to buy and set an AMD price target of $600, while Nvidia fell about 5 percent before the open on reports of a board investigation into its chief executive.

AMD stock closed at $449.04 on Friday, up 11.04 percent, on 45.2 million shares, more than double its three-month average volume. No AMD announcement came with it. The earnings that moved the stock were three days old.

AMD fell 16.4 percent on Thursday to $404.40. The Philadelphia semiconductor index dropped 12.2 percent, its worst day since March 2020, on worries that Democratic midterm wins would bring tighter rules for AI data centers. On r/stocks, a user called Equireason wrote that “the report didn’t change Tuesday to Thursday,” and that the drop “reads more like a crowded semis unwind than a sudden demand miss in the part of the business that drove the print.”

AMD earnings for the third quarter were the best in the company’s history by its own account. AMD Q3 2026 revenue was $13.4 billion, up 45 percent from a year earlier, and data-center revenue nearly doubled to $8.5 billion. Non-GAAP earnings were $2.09 a share. That is up 74 percent, and the shares rose about 5 percent after hours to $508.20. The fourth quarter was guided to about $17 billion, and 2027 revenue to growth of more than 80 percent.

Tom O’Malley of Barclays asked the first question on the earnings call. He asked whether the 2027 growth was backed by supply — wafers, packaging, substrates, memory — and whether demand would outstrip supply if AMD could get more. Lisa Su said demand was running ahead of supply and that AMD was working with supply-chain partners to increase it. In the prepared remarks she had put it the other way round: “We have worked across our supply chain to secure the wafers, substrates, advanced packaging, memory and other key components needed to support much higher growth next year.”

The filing says how much of that supply AMD has already promised to buy. Future purchase commitments at September 26 stood at $48.8 billion — $11.2 billion for the rest of 2026 and $22.2 billion in 2027 alone. The 10-Q’s own warning is that AMD keeps entering “long-term purchase commitments in advance of demand,” and that suppliers “may extend lead times, limit supply or increase prices due to capacity constraints.”

The cash to pay for it is arriving more slowly. AMD generated $1.2 billion in operating cash in the quarter and spent $648 million on capital equipment. Free cash flow was $554 million. That is about 16 cents for every dollar of the $3.5 billion in adjusted net income, down from $1.5 billion of free cash flow a year earlier. Jean Hu, the chief financial officer, tied it to “increased working capital investment and ongoing capital expenditures to secure equipment and capacity.” Inventory absorbed $3 billion of cash in the quarter alone.

Total debt stood at $7.1 billion at the end of September, up 119 percent from $3.2 billion three months earlier after a $4.75 billion bond sale in August. Inventory reached $11.5 billion, up $3 billion in the quarter, and the amount AMD owes its own suppliers rose to $7.8 billion from $2.9 billion at the end of 2025.

TrendForce expects conventional DRAM contract prices to rise 10 to 15 percent this quarter and NAND flash 15 to 20 percent; with high-bandwidth memory included, the DRAM figure is 15 to 20 percent. SK hynix told the market its DRAM and high-bandwidth memory are effectively sold out to 2029. Su told analysts the company was working with customers to share the higher costs, and the quarter already showed the effect: client revenue fell 4 percent from the second quarter, which the company attributed to higher memory costs weighing on PC demand. AMD’s own release lists the availability of memory supply among its risk factors.

The first Helios racks went to five customers: Anthropic, Meta, Microsoft, OpenAI and Oracle. The fourth quarter will be the first in which AMD’s AI chip revenue passes its server CPU revenue. The warrants AMD issued to customers under its AI agreements produced a $1.1 billion non-cash charge in the quarter, cutting reported earnings to $1.46 a share from $2.09 on the adjusted measure, and Hu said the quarterly adjustments “are expected to increase as we and our customers progress under these agreements,” varying with the share price.

Gaming fell 40 percent. Revenue was $773 million, and the client and gaming segment is guided to fall more than 20 percent sequentially in the fourth quarter. Su is planning for PC unit shipments to fall by a double-digit percentage in 2027, calling it “a down year” for the market. Data center was 64 percent of revenue in the quarter, up from 47 percent a year ago, and is expected to pass 80 percent of revenue in 2027.

Nine-month revenue was $35.2 billion. The fourth quarter’s $17 billion takes 2026 to roughly $52 billion. Growth of more than 80 percent on top of it puts 2027 above $93 billion. Oppenheimer, which raised AMD on Monday, expects data-center revenue alone to grow 135 percent next year and account for 85 percent of sales, with about three gigawatts of computing capacity shipped.

On Stocktwits on Monday, as Nvidia fell, a user called seaw wrote that it was “time for things to get back to normal, start pricing in the Q3 results, and hit a new ATH.” On Threads on Friday, iamsam.exe wrote: “I bought AMD stocks when it was $13.12. Best decision I’ve ever made.” In the r/stocks thread, RayU_AZ’s advice to holders was shorter: “I hope you didn’t sell yet.” The supply chain appears in none of those threads. It appears in the filing: $48.8 billion of purchase commitments, $22.2 billion of it due in 2027.

The warrants will keep being remeasured every quarter, Hu said, and the amounts will vary with the share price. The share count AMD expects for the fourth quarter is about 1.67 billion shares, including the Taalas and World Labs acquisitions, and, Hu said, not the customer warrants.