The world's second-largest chipmaker walked past estimates, as strong microprocessor sales helped to boost revenue 23% and earnings nearly 73%. AMD earned $76 million, or 18 cents a share, on sales of $1.52 billion, up from $44 million, or 12 cents a share, on sales of $1.24 billion a year earlier.

Analysts had expected earnings of 8 cents a share on sales of $1.38 billion, according to Thomson First Call. AMD had said it expected computer-chip sales to "exceed normal seasonal patterns" in the third quarter, but declined to project memory unit results.

"It's clear evidence that this is a much different company than it was two to three years ago," said Sangeeth Peruri, semiconductor analyst for Seligman Technology Group, a division of J & W Seligman & Co., which holds AMD shares. "If [the company] continues to grow at these levels, the leverage is huge in the model."

Still, it's possible the margins should have been even higher, Peruri said. One factor that could have weighed on them was $66 million in bonuses that AMD paid out during the quarter, up dramatically from $16 million in the previous quarter and $17 million in the same period a year ago.

"With the revenue number they came up with, it's possible people were hoping for a larger EPS," Peruri said.

Reflecting that, the stock shed $1.25, or 5.2%, to $22.75 early Wednesday. The price is 98 times this year's Thomson First Call estimate and 35 times the 2006 consensus, although those estimates will rise following the blowout quarter.

But for Wall Street, the investment reaction on Wednesday also seemed to reflect the notion that it might be wise to take profits on a company that could be at an operational peak. Several analysts' notes reflected concerns about performance in 2006, namely that AMD's latest quarter may have been helped by missteps by rival Intel (INTC - commentary - Cramer's Take) that can't be counted on next year.

With AMD shares marching steadily higher for the past five months -- rising by more than two-thirds -- a catalyst to take the stock any higher didn't necessarily appear in AMD's report.

AMD's gross margin was 41% in the three months to Sept. 25, up from 39% in the previous quarter and above 40% in the third quarter last year. The company has long-term targets of 60% margins, but that takes into consideration the memory group's spinoff.

The Sunnyvale, Calif.-based company recorded an operating profit of $79 million compared with $68 million a year ago and an operating loss of $7 million in the previous quarter.