Advanced Micro Devices (NASDAQ: AMD) stock is losing ground Wednesday after the publication of the company’s third-quarter results. The semiconductor specialist’s share price was down 9.6% as of 1 p.m. ET.

AMD published its Q3 results after the market closed yesterday, delivering earnings that were in line with the market’s expectations and sales that came in better than anticipated. The company posted non-GAAP (adjusted) earnings per share of $0.92 on sales of $6.82 billion, with revenue in the period beating the average Wall Street estimate’s call for revenue of $6.71 billion. But despite the sales beat in the quarter, management’s forward guidance left investors feeling bearish.

AMD posts solid Q3 results

While the stock is seeing big sell-offs in today’s trading, AMD’s third-quarter results weren’t concerning in isolation. Overall revenue was up 17.6% year over year in the period, and adjusted earnings per share were up 31% compared to the prior-year period.

The company saw some encouraging momentum in the crucial data center segment, with revenue climbing 122% year over year thanks to momentum for its Instinct GPUs and EPYC central processing units. Meanwhile, client segment revenue increased 29% year over year to $1.9 billion. On the other hand, gaming segment revenue declined 69% year over year to $462 million, and embedded segment revenue fell 25% to $927 million. If AMD had issued stronger forward guidance, the performance for the data center segment might have been enough to power gains for the stock today, but Wall Street wasn’t satisfied with management’s outlook.

Can AMD sustain its momentum?

For the fourth quarter, AMD is guiding for sales to come in between $7.2 billion and $7.8 billion. Hitting the midpoint of its guidance range would mean delivering annual sales growth of 22% and sequential quarterly sales growth of 10%. Meanwhile, the average analyst estimate calls for the business to post sales of $7.55 billion in the quarter. On the margins front, management is targeting an adjusted gross margin of 54% for Q4 — in line with what it posted in Q3.

AMD’s forward guidance wasn’t terrible by any stretch of the imagination, but Wall Street analysts are becoming concerned that the business won’t be able to maintain its momentum in artificial intelligence (AI) processors into next year. With sales guidance falling slightly short of Wall Street’s target and expected gross margins not climbing over those in Q3, investors may be worried that the company is relying on relatively low pricing to drive adoption for its AI chips. Performance for the the data-center segment will continue to be the key driver for AMD stock, and the outlook on that front remains somewhat speculative.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices. The Motley Fool has a disclosure policy.