AMD shares are down more than 23 percent in after market trading after the company missed third quarter revenue targets and issued lower-than-expected fourth quarter guidance.
The semiconductor maker posted a net income of $102 million, or nine cents per share. Non-GAAP earnings were 13 cents per share on revenue of $1.65 billion, up four percent year-over-year.
Wall Street was expecting AMD to post earnings of 13 cents per share on revenue of $1.7 billion.
In prepared remarks, CEO Lisa Su highlighted strong sales for AMD's Ryzen desktop and mobile products, which offset lower graphics revenue.
"We delivered our fifth straight quarter of year-over-year revenue and net income growth driven largely by the accelerated adoption of our Ryzen, EPYC and datacenter graphics products," said Su.
"Client and server processor sales increased significantly although graphics channel sales were lower in the quarter. Looking forward, we believe we are well positioned for further market share gains as we continue making significant progress towards our long-term financial targets," she added.
Here's a closer breakdown of the company's performance, by department:
by lower semi-custom product and IP-related revenue.
Technology analyst Patrick Moorhead points out that AMD's graphics segment decline was expected this quarter, noting that AMD's current GPU market dynamics hinge on the release of its 7nm Navi GPU, which should bolster its position in the enterprise market.
"I was a bit surprised not to see bigger upsides in processor volumes based on Intel's reset, but I think this is just conservatism," Moorhead said. "In my discussions with PC and server OEMs, I am seeing increased interest in AMD's roadmap."
For the current quarter, AMD expects revenue of $1.45 billion, plus or minus $50 million. Analysts were expecting Q4 earnings of 11 cents a share on revenue of $1.6 billion.