Advanced Micro Devices (AMD  ) posted very strong third-quarter results with $2.8 billion in revenue which was a 56% increase year over year. AMD's stock price opened higher following earnings but gave back these gains as the broad market endured a steep selloff.

AMD has made remarkable gains in terms of market share and has been rapidly closing the divide between it and Intel (INTC  ). Many believe that AMD's chips are now superior to Intel's and that Intel may be a generation behind in terms of development. AMD's chips will also be used in Sony (SNE  ) and Microsoft (MSFT  ) gaming consoles.

Xilinx Deal

The company also announced its purchase of Xilinx (XLNX  ) for $35 billion. Xilinx makes field-programmable gate arrays (FPGA) that are used in many types of semiconductors. The deal will add 13,000 employees to AMD and increase its total addressable market to $110 billion. Analysts believe the deal will benefit AMD's data center business.

AMD had growth of 116% in the Enterprise segment, and it believes this deal can add to that growth. AMD also expects to realize $300 million in cost savings with the deal.

Inside the Numbers

Maybe the most impressive part was AMD's net income tripling from $120 million to $390 million. AMD is benefitting from a number of tailwinds - cloud computing growth, data centers, PC sales, console sales, AI, and machine learning growth. Of course, the coronavirus has also been an accelerant to these trends as its increased activity with the digital economy which leads to more demand for servers. It's also led to a surge in sales for PCs and laptops due to remote work and learn from home.

AMD is reaping the benefits from it taking Intel's place as the dominant semiconductor company in terms of processing power. There is some inertia with corporate spending but AMD should be expected to continue taking market share from Intel in consumer products and data centers. It's also not a coincidence that AMD bought an FPGA company a couple of years after Intel bought Altera in 2015. Of course, the overall semiconductor market will keep growing as well which is another tailwind for AMD's stock.