AMD expects 2027 operating expenses to grow slower than revenue

AMD is signaling that 2027 will be less about spending and more about harvesting. The company told investors during its Q2 2026 earnings call that operating expenses next year are expected to grow at less than half the rate of its revenue, a projection that points toward meaningful expansion in operating margins as its data center business shifts into a higher gear.

The numbers doing the heavy lifting

AMD’s Q3 2026 results, released on November 3, gave the forecast some weight to stand on. Revenue for the quarter came in at $13.4 billion, a 45% increase compared to the same period a year earlier. The data center segment did more than its share of the work, posting $8.5 billion in revenue, up 97% year-over-year.

That kind of growth rate in data center, nearly doubling in a single year, reflects accelerating demand for both EPYC server CPUs and AMD’s Instinct MI450-series GPUs, the latter of which are integrated into the company’s Helios rack platform.

GAAP operating expenses for Q3 2026 were reported at $4.378 billion, a 25% increase year-over-year. Revenue grew nearly twice as fast.

Looking ahead, AMD guided Q4 2026 revenue at approximately $17 billion, which represents a midpoint growth rate of 66% compared to the year-ago quarter.

Revising the long-term targets upward

AMD’s updated long-term model is notably more ambitious than what the company laid out at its November 2025 Financial Analyst Day. At that event, management set a target of greater than 35% compound annual growth rate for overall revenue. The new guidance, delivered during Q2 2026, signals that actual growth is expected to significantly surpass that benchmark.

Non-GAAP earnings per share are also expected to exceed the $20 annual target that was previously set for the long-term model.

Server CPU revenue growth is expected to exceed 70% year-over-year in 2027, according to the company’s projections. Data center revenue overall is projected to more than double.

The company’s key customers for data center solutions include Meta, OpenAI, Anthropic, Microsoft, and Oracle, a roster that doubles as a who’s-who of organizations currently racing to build out AI compute capacity.

What this means for the competitive picture

AMD’s data center segment growing 97% year-over-year does not mean Nvidia is in trouble, but it does mean AMD is not simply picking up the scraps. The Instinct GPU line, combined with EPYC’s growing footprint in server deployments, gives AMD a credible two-pronged story in AI infrastructure.

Supply chain positioning is also part of the 2027 story. AMD noted that strategic focus areas include high-bandwidth memory and advanced wafers in preparation for the 2027 product ramps.

The risks worth watching include execution on the Instinct MI450 ramp, competition from both Nvidia and custom silicon efforts from hyperscalers like Google and Amazon, and any softening in enterprise AI spending that could compress the demand assumptions baked into the guidance. AMD’s Q4 2026 revenue figure of approximately $17 billion, expected later this year, will serve as the first meaningful checkpoint for whether the trajectory is on track.