AI infrastructure spending is generating strong results for companies supplying processors, networking equipment, servers and electrical systems.
Latest earnings also show different business conditions: Qualcomm is pursuing a data center market as handset revenue contracts, Supermicro is rapidly expanding server production and electrical equipment makers are reporting growing backlogs.
For data center operators and IT buyers, the results show how AI demand is affecting suppliers across compute, networking, servers and electrical infrastructure. They also reveal the costs and capacity pressures accompanying that growth.
Chipmakers pursue AI compute demand
AMD reported third-quarter revenue of $13.4 billion, up 45% from a year earlier. Its Data Center segment generated a record $8.5 billion, a 97% year-over-year increase, driven by demand for EPYC server processors and Instinct GPUs.
AMD didn't break out revenue between its server CPUs and AI accelerators. CEO Lisa Su attributed the growth to demand for both product lines.
“We delivered a record quarter with revenue exceeding the high end of our guidance as Data Center segment sales nearly doubled year-over-year,” Su said in the company's third-quarter earnings release. “Demand for our Instinct and EPYC products continued to strengthen, and we expect growth to accelerate further in the fourth quarter as we scale Helios and ‘Venice’ production.”
AMD forecast fourth-quarter revenue of approximately $17 billion, plus or minus 3%. At the midpoint, which would represent year-over-year growth of approximately 66%.
Qualcomm is pursuing a different route into the market. Its fiscal fourth-quarter revenue fell 8% to $10.32 billion, with its handset business accounting for much of the pressure. Handset chip revenue dropped 26% to $5.14 billion.
Automotive revenue increased 89% to nearly $2 billion, while IoT revenue rose 4% to $1.89 billion.
President and CEO Cristiano Amon said in the company's earnings release that fiscal 2027 would mark the start of a ramp in its data center business.
“Fiscal 2027 marks the start of our nonhandset revenue inflection, including the ramp of our Data Center business,” Amon said. “Nonhandset revenues are projected to grow by more than 60% year-over-year, and we are reiterating our fiscal 2027 Data Center revenue target of $5B.”
The $5 billion figure is Qualcomm's fiscal 2027 revenue target, not current reported data center revenue. Counterpoint Research expects Qualcomm's data center revenue to exceed $650 million in the December 2026 quarter, according to post-earnings commentary from senior analyst Shivani Parashar. The firm expects revenue to scale throughout 2027, with strong year-over-year growth continuing into 2028.
Stephen Sopko, semiconductor and deep tech practice lead at HyperFrame Research, said Qualcomm's $5 billion target is credible as a ramp opportunity, although the company faces execution risks as it expands its data center business.
“The hard parts are staying on the hyperscaler's roadmap across generations, proving tokens per watt on real inference fleets, and getting enough software and tooling that the silicon is actually utilized,” Sopko said.
Qualcomm's data center ambitions include a multigenerational collaboration with Amazon to develop customized silicon for AI inference workloads and optical connectivity for data center networks. Announced in September, the collaboration gives Qualcomm another potential market for its chip design and connectivity technologies.
The company also faces pressure from rising semiconductor input costs. Qualcomm cited higher costs for wafer fabrication, assembly, testing, advanced packaging, memory and other materials. It's raising product prices to offset those increases and expects the full benefit to reach the gross margins of its QCT semiconductor business in the second half of fiscal 2027.
Memory and advanced packaging remain constraints on accelerator production, Sopko said. “For silicon delivery, the bottleneck sequence is still memory, then packaging, then everything else.”
AI clusters drive networking demand
Arista reported third-quarter revenue of $3.66 billion, up 58.5% year over year and 20.5% sequentially. Its GAAP operating margin increased to 44.9%, from 42.4% a year earlier.
“Arista registered another momentous quarter with the highest year-over-year revenue growth since our IPO and record profitability, surpassing even my high expectations,” CEO Jayshree Ullal said in the company's third-quarter earnings release.
Arista forecast fourth-quarter revenue of $3.9 billion to $4 billion.
The company is developing Ethernet architectures for both scale-out networks connecting systems and scale-up networks connecting accelerators within them. Its Etherlink SU-144 architecture supports up to 144 accelerators in a single-hop rack-scale domain, with larger cross-rack topologies extending to 1,024 XPUs. Those figures describe architectural capabilities, not deployed systems.
Ron Westfall, vice president and practice lead for networking and infrastructure at HyperFrame Research, said hyperscaler deployments of 800G networking and Ethernet fabrics are driving Arista's growth. He estimated networking, historically 10% to 15% of AI cluster infrastructure investment, could account for 20% or more.
“As GPU clustering hits massive internode communication bottlenecks, high-performance networking is capturing an expanding percentage of total AI capex,” Westfall said.
Westfall also pointed to thermal management, optical interconnect density and power consumption as constraints for larger AI clusters. He estimated that high-speed transceivers can consume 10% to 20% of total cluster power. He also said suppliers of digital signal processors, indium phosphide lasers and advanced packaging are struggling to keep pace with demand for 800G and 1.6T optics.
Supermicro expands server production
Supermicro's preliminary, unaudited first-quarter fiscal 2027 results show rapid growth in its server business.
The company reported net sales of $19.9 billion for the quarter ended September 30, compared with $5 billion a year earlier and $11.1 billion in the previous quarter. Net income reached $1.59 billion, up from $168 million a year earlier.
Gross margin fell to 12.7% from 17.5% in the previous quarter, although it remained above the 9.3% reported a year earlier.
Supermicro used $434 million in cash from operating activities during the quarter. At the end of September, it held $6.9 billion in cash and cash equivalents against $8.6 billion in bank debt and convertible notes.
The company forecast second-quarter revenue of $19.5 billion to $21.5 billion and full-year fiscal 2027 revenue of $72 billion to $82 billion.
Supermicro didn't identify a single cause for the sequential margin decline. Its results remain preliminary and unaudited.
Eaton reports growing electrical backlog
Eaton reported third-quarter sales of $8.9 billion, up 28% year over year, with organic growth of 19%.
Its Electrical Americas business recorded $4.2 billion in sales, up 22% organically. Electrical Global sales reached $2.7 billion, up 27% organically.
Eaton's 12-month rolling average orders increased 39% in Electrical Americas and 51% in Electrical Global. Its total electrical backlog grew 46% year over year, while segment margins reached 25.3%.
Those figures cover Eaton's broader electrical markets, including utility and industrial customers. They don't represent data center demand alone.
Eaton also agreed to acquire European medium-voltage equipment maker COL Group, expanding its manufacturing footprint and power distribution capabilities for data center and utility markets. The company raised its full-year adjusted earnings-per-share forecast to $13.70 to $13.80.
Shane Snider is a senior news writer at TechTarget, covering AI infrastructure, hyperscale data centers, cloud platforms, and the power and energy systems driving modern compute expansion. You can reach Shane at [email protected] or on LinkedIn.
