AMD is showing strong growth in the datacenter GPU business next year.

Major chipmaker AMD announced its third-quarter earnings, which exceeded analysts' financial estimates for the quarter revenue, but the revenue guidance for the fourth quarter fell below market expectations.

AMD's financial results for the quarter ending in September exceeded the expected earnings per share of 68 cents with an adjusted profit per share of 70 cents, and the revenue increased by 4% compared to the same period last year to $5.8 billion compared to the expected $5.7 billion.

On the other hand, AMD expected revenue of approximately $6.1 billion for the fourth quarter, while analysts had expected $6.37 billion.

Initially, AMD's stock price dropped by about 4% in after-hours trading, but rebounded as the company raised its outlook for the artificial intelligence chip business.

AMD is one of the few chip manufacturers capable of producing GPUs, a market currently dominated by Nvidia. GPUs are mainly used for training and deploying AI models, driving the GPU market this year amid the AI boom.

The revenue of AMD's datacenter division in the third quarter, including server processors CPUs and AI chip GPUs, remained unchanged at $1.6 billion compared to the same period last year. AMD anticipates strong growth in its datacenter business in the fourth quarter.

AMD's CEO stated during the earnings call that the revenue from datacenter GPUs is expected to reach approximately $0.4 billion in the fourth quarter, surpassing $2 billion in 2024.

In its earnings report, AMD mentioned that the upcoming AI chips, MI300A and MI300X, are set to enter mass production this quarter.