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AMD Rides on Accelerating Data Center Growth: A Sign of More Upside?
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Key Takeaways
AMD Data Center revenues hit $5.38B, up 39.4% y/y, making up 52.4% of total, led by EPYC and Instinct demand.
AMD saw strong hyperscaler demand, with 230 new instances and EPYC cloud deployments up 50% YoY to ~1,600.
AMD guides 1Q'26 revenues near $9.8B, ~32% y/y growth, while facing stiff competition from NVDA and AVGO.
Advanced Micro Devices (AMD - Free Report) is riding on strong Data Center revenues, which reached $5.38 billion, up 39.4% year over year and accounted for 52.4% of fourth-quarter 2025 total revenues. Sequentially, revenues climbed 23.9%. The top-line benefited from strong demand for fifth-gen EPYC processors and Instinct MI350 series GPUs. In server, adoption of fifth-gen EPYC CPUs accounted for more than half of the total server revenues, while fourth-gen EPYC sales were also robust.
In cloud, hyperscaler demand was very strong as North American customers expanded deployments. EPYC-powered public cloud offerings grew significantly in the reported quarter, with AWS, Google and others launching more than 230 new AMD instances. Hyperscalers launched more than 500 AMD-based instances in 2025, increasing the number of EPYC cloud instances by more than 50% year-over-year to nearly 1,600. The leading server providers now offer more than 3,000 solutions powered by fourth and fifth-gen EPYC CPUs that are optimized for all major enterprise workloads. As a result, the number of large businesses deploying EPYC on-prem more than doubled in 2025.
Strong server CPU demand has been a key catalyst for AMD. As hyperscalers expand their infrastructure to meet growing demand for cloud services and AI, EPYC is gaining adoption. This trend bodes well for the next-gen Venice CPU. AMD is gaining traction in the data center AI business. The company delivered record Instinct GPU revenues in the fourth quarter, led by strong demand for MI 350 Series.
AMD’s data center AI business prospects are expected to accelerate with the upcoming MI450 series, which forms the crux of the 6-gigawatt (GWs) deal inked between AMD and Meta Platforms. The launch of the MI500 series, powered by AMD’s CDNA 6 architecture built on advanced 2-nanometer process technology and featuring high-speed HBM4E memory, is expected to drive further growth.
Tough Competition Hurts AMD’s Prospects
AMD now expects first-quarter 2026 revenues of $9.8 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 32% and a sequential decline of approximately 5%. The Zacks Consensus Estimate for revenues is currently pegged at $9.84 billion, suggesting 32.3% growth from the figure reported in the year-ago quarter.
AMD’s prospects suffer from stiff competition. NVIDIA (NVDA - Free Report) and Broadcom (AVGO - Free Report) are major competitors in the Data Center space. NVIDIA is at the center of AI computing, with its products widely used across data centers, gaming and autonomous vehicles. The company’s newer Hopper 200 and Blackwell GPU platforms are being adopted quickly as customers work to grow their AI infrastructure. Broadcom is benefiting from strong demand for its networking products and custom AI accelerators. AVGO’s networking portfolio is gaining from strong demand for Tomahawk 5 and 6 products, as well as the Jericho 4 Ethernet fabric router.
AMD shares have dropped 5.3% year to date, outperforming the broader Zacks Computer and Technology sector’s fall of 6.2%.
AMD Stock’s Performance
Image Source: Zacks Investment Research
AMD stock is overvalued, with a forward 12-month price/sales of 6.78X compared with the broader sector’s 5.84X. AMD has a Value Score of D.
AMD Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at $1.27 per share, unchanged over the past 30 days, suggesting 32.3% year-over-year growth.
View the Zacks #1 Rank List
Image: Bigstock
AMD Rides on Accelerating Data Center Growth: A Sign of More Upside?
Key Takeaways
Advanced Micro Devices (AMD - Free Report) is riding on strong Data Center revenues, which reached $5.38 billion, up 39.4% year over year and accounted for 52.4% of fourth-quarter 2025 total revenues. Sequentially, revenues climbed 23.9%. The top-line benefited from strong demand for fifth-gen EPYC processors and Instinct MI350 series GPUs. In server, adoption of fifth-gen EPYC CPUs accounted for more than half of the total server revenues, while fourth-gen EPYC sales were also robust.
In cloud, hyperscaler demand was very strong as North American customers expanded deployments. EPYC-powered public cloud offerings grew significantly in the reported quarter, with AWS, Google and others launching more than 230 new AMD instances. Hyperscalers launched more than 500 AMD-based instances in 2025, increasing the number of EPYC cloud instances by more than 50% year-over-year to nearly 1,600. The leading server providers now offer more than 3,000 solutions powered by fourth and fifth-gen EPYC CPUs that are optimized for all major enterprise workloads. As a result, the number of large businesses deploying EPYC on-prem more than doubled in 2025.
Strong server CPU demand has been a key catalyst for AMD. As hyperscalers expand their infrastructure to meet growing demand for cloud services and AI, EPYC is gaining adoption. This trend bodes well for the next-gen Venice CPU. AMD is gaining traction in the data center AI business. The company delivered record Instinct GPU revenues in the fourth quarter, led by strong demand for MI 350 Series.
AMD’s data center AI business prospects are expected to accelerate with the upcoming MI450 series, which forms the crux of the 6-gigawatt (GWs) deal inked between AMD and Meta Platforms. The launch of the MI500 series, powered by AMD’s CDNA 6 architecture built on advanced 2-nanometer process technology and featuring high-speed HBM4E memory, is expected to drive further growth.
Tough Competition Hurts AMD’s Prospects
AMD now expects first-quarter 2026 revenues of $9.8 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 32% and a sequential decline of approximately 5%. The Zacks Consensus Estimate for revenues is currently pegged at $9.84 billion, suggesting 32.3% growth from the figure reported in the year-ago quarter.
AMD’s prospects suffer from stiff competition. NVIDIA (NVDA - Free Report) and Broadcom (AVGO - Free Report) are major competitors in the Data Center space. NVIDIA is at the center of AI computing, with its products widely used across data centers, gaming and autonomous vehicles. The company’s newer Hopper 200 and Blackwell GPU platforms are being adopted quickly as customers work to grow their AI infrastructure. Broadcom is benefiting from strong demand for its networking products and custom AI accelerators. AVGO’s networking portfolio is gaining from strong demand for Tomahawk 5 and 6 products, as well as the Jericho 4 Ethernet fabric router.
AMD’s Share Price Performance, Valuation & Estimates
AMD shares have dropped 5.3% year to date, outperforming the broader Zacks Computer and Technology sector’s fall of 6.2%.
AMD Stock’s Performance
Image Source: Zacks Investment Research
AMD stock is overvalued, with a forward 12-month price/sales of 6.78X compared with the broader sector’s 5.84X. AMD has a Value Score of D.
AMD Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at $1.27 per share, unchanged over the past 30 days, suggesting 32.3% year-over-year growth.
Advanced Micro Devices, Inc. Price and Consensus
Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote
AMD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.