Advanced Micro Devices shares jumped 11.04% on Friday, leading a rebound in chip stocks a day after the sector suffered its worst sell-off since 2020.

AMD gained $44.64 to close at $449.04, trading as high as $459.78 on volume of more than 45 million shares. The stock had plunged 17.3% on Thursday, when the Nasdaq fell 5.5% and Nvidia dropped 9.3% after the US midterm results raised fears of tighter data-centre regulation. The semiconductor index climbed more than 6% on Friday.

The rebound was powered by AMD's third-quarter results, reported on Tuesday. Revenue rose 45% from a year earlier to a record $13.38 billion, beating the $13.09 billion analysts expected. Adjusted earnings per share rose 74% to $2.09, against a $1.95 consensus.

Data-centre revenue nearly doubled to a record $8.5 billion, accounting for 64% of total sales, as demand for AMD's server processors and AI accelerators surged. By contrast, the client and gaming business fell 8% to $3.7 billion, with gaming revenue down 40% to $773 million while PC sales rose 7% to $2.9 billion.

Guidance points to 80% growth in 2027

For the fourth quarter, AMD guided to revenue of about $17 billion, up 66% from a year earlier and ahead of the $16.2 billion Wall Street expected, at a 55% adjusted gross margin. Looking further ahead, the company said total revenue would rise by at least 80% in 2027, with server revenue doubling and its data-centre AI business more than doubling.

Chief executive Lisa Su called the market's reaction to AI spending "short-sighted", saying AMD has good visibility into customer data-centre needs through 2027. Analysts largely raised price targets after the update, with Piper Sandler lifting its target to $650 and JPMorgan to $575. Even after Friday's jump, AMD still sits about 32% below its $658.52 peak.