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Shares of Advanced Micro Devices Inc. (AMD) experienced a 5% drop in Tuesday's extended session, following the release of the company's third-quarter earnings report. While the semiconductor giant posted positive profit metrics for the latest quarter, its revenue forecast for the current period fell short of expectations, leading to a decline in stock value.

AMD reported a net income of $299 million, or 18 cents per share, in the third quarter, compared to $66 million, or 4 cents per share, in the same quarter last year. On an adjusted basis, the company earned 70 cents per share, up from 67 cents per share in the previous year, surpassing analysts' expectations of 68 cents per share.

The company's revenue also showed growth, reaching $5.80 billion for the quarter, up from $5.57 billion in the previous year. Nevertheless, this figure fell slightly short of the FactSet consensus estimate of $5.70 billion.

In terms of specific segments, AMD's data-center revenue remained flat at $1.6 billion, meeting the FactSet consensus. The company experienced growth in its 4th Gen Epyc central processing units but saw declines in adaptive system-on-ship (SoC) data-center products. However, this segment showed a 21% sequential increase in revenue.

CEO Lisa Su expressed optimism about the data-center business, attributing its growth trajectory to the company's Epyc CPU portfolio and the increasing shipments of the Instinct MI300 accelerator to support various deployments with hyperscale, enterprise, and AI customers.

AMD's client-segment revenue experienced a significant boost, reaching $1.5 billion, a 42% increase from the previous year, driven by strong performance in Ryzen mobile processors. This figure exceeded the FactSet consensus estimate of $1.2 billion.

However, the gaming revenue suffered an 8% decline, amounting to $1.5 billion, which matched the FactSet consensus. Additionally, embedded sales reported a 5% decrease, totaling $1.2 billion, slightly below the FactSet consensus of $1.3 billion.

Looking ahead, AMD projects revenue between $5.8 billion to $6.4 billion for the fourth quarter. This forecast fell short of analysts' expectations of $6.4 billion. The company also expects an adjusted gross margin of about 51.5%, slightly higher than the 51% reported in the third quarter.

Despite posting strong profit metrics, it appears that AMD's lower revenue outlook contributed to the stock's decline. Investors will continue to closely monitor the company's progress in the data-center segment and its ability to meet revenue targets in the upcoming quarter.