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AMD Jumps 76% in a Month: Is There More Room for the Stock to Rise?
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Key Takeaways
AMD shares have climbed 75.8% YTD as Data Center revenues surged 57% to $5.8B.
AMD sees server CPU TAM above $120B by 2030 and projects server CPU revenues up 70% in Q2.
AMD aims for tens of billions in annual Data Center AI revenue in 2027.
Advanced Micro Devices (AMD - Free Report) shares have risen 75.8% year to date (YTD), outperforming the broader Zacks Computer and Technology sector’s return of 12.6%. Strong demand for data center EPYC processors and Instinct GPUs has been the key catalyst. However, AMD is facing stiff competition from the likes of NVIDIA (NVDA - Free Report) , Broadcom (AVGO - Free Report) and Intel (INTC - Free Report) across domains, including AI-powered data-centers, high-performance computing and AI PCs, which might limit further appreciation in AMD shares. YTD, shares of NVIDIA, Broadcom and Intel have returned 12.4%, 10.1% and 89%, respectively. So, what should investors do with AMD stock?
AMD Stock’s Price Performance
Image Source: Zacks Investment Research
Expanding Data Center Footprint Boosts AMD’s Prospects
AMD is entering a stronger growth phase as AI infrastructure demand shifts the company’s mix toward the Data Center segment, revenues from which surged 57% year over year to $5.8 billion, driven by EPYC CPUs and Instinct GPUs. AMD’s core upside case is that AI inference and agentic AI are expanding demand not only for GPUs, but also for high-performance server CPUs used for orchestration, data movement, and head-node workloads.
AMD delivered its fourth consecutive quarter of record server CPU revenues in the first quarter of 2026, as the figure increased more than 50% year-over-year with sales to both cloud and enterprise customers each growing more than 50%. Share gains accelerated year-over-year, reflecting the ramp of fifth-gen EPYC Turin CPUs and the continued strength of fourth-gen EPYC processors across a wide range of workloads. The company now expects the server CPU total addressable market to be more than $120 billion by 2030 (growth of more than 35% annually) and expects server CPU revenue to grow more than 70% year over year in Q2. Verano, AMD’s first EPYC CPU purpose-built for AI infrastructure, is likely to boost the company’s server market share.
EPYC adoption is increasing as it is supporting a broad range of AI workloads from general-purpose compute and data processing to head nodes for accelerators and emerging Agentic applications. EPYC-powered cloud instances increased nearly 50% year-over-year to more than 1,600 in the first quarter of 2026. In enterprise, AMD is benefiting from an expanding small and medium business clientele with expansion across financial services, health care, industrial and digital infrastructure companies.
AMD’s AI accelerator opportunity is improving, supported by large-scale engagements with Meta and OpenAI, and growing MI450/Helios customer interest. Data Center AI business revenues jumped by a significant double-digit percentage year-over-year as adoption of Instinct accelerates across cloud, enterprise, sovereign and supercomputing customers in the first quarter of 2026. The company is confident in delivering tens of billions of dollars of annual Data Center AI revenues in 2027.
The Zacks Consensus Estimate for second-quarter 2026 earnings is pegged at $1.60 per share, up 11.1% over the past 30 days. AMD reported earnings of 48 cents in the year-ago quarter.
The consensus mark for 2026 earnings is pegged at $7.18 per share, up 8.5% over the past 30 days, suggesting 72.2% growth from 2025’s reported figure.
AMD’s Gross Margins Under Pressure from Unfavorable Mix
AMD expects the ramp of MI450 beginning the third quarter of 2026 and into the fourth quarter to hurt gross margin expansion.
In the first quarter of 2026, gross margin expanded 170 basis points (bps) to 55%, driven by a favorable product mix, including a higher data center revenue contribution. For the second quarter of 2026, AMD expects gross margin to be roughly 56%, driven by higher CPU sales.
AMD also expects PC shipments to be lower in the second half due to higher memory and component costs. This is expected to hurt higher margin client revenues, likely putting gross margin under pressure. Moreover, lower-margin gaming revenues are also expected to decline due to higher memory and component costs.
AMD Shares are Overvalued
AMD shares are overvalued, as suggested by a Value Score of F. The AMD stock is trading at a forward 12-month price/earnings (P/E) of 53.06X compared with the broader sector’s 25.45X.
AMD shares are trading at a premium compared with peers, including NVIDIA and Broadcom. Shares of NVIDIA and Broadcom are trading at a P/E multiple of 24.96 and 28.28, respectively.
AMD Stock’s Valuation
Image Source: Zacks Investment Research
Here’s Why AMD Stock is a Hold Now
AMD’s expanding portfolio and growing data center AI footprint are expected to improve its top-line growth over the long term. So, investors currently holding the stock should stay put.
However, AMD’s near-term prospects are limited given stiff competition. Stretched valuation is a concern for investors.
View the Zacks #1 Rank List
Image: Bigstock
AMD Jumps 76% in a Month: Is There More Room for the Stock to Rise?
Key Takeaways
Advanced Micro Devices (AMD - Free Report) shares have risen 75.8% year to date (YTD), outperforming the broader Zacks Computer and Technology sector’s return of 12.6%. Strong demand for data center EPYC processors and Instinct GPUs has been the key catalyst. However, AMD is facing stiff competition from the likes of NVIDIA (NVDA - Free Report) , Broadcom (AVGO - Free Report) and Intel (INTC - Free Report) across domains, including AI-powered data-centers, high-performance computing and AI PCs, which might limit further appreciation in AMD shares. YTD, shares of NVIDIA, Broadcom and Intel have returned 12.4%, 10.1% and 89%, respectively. So, what should investors do with AMD stock?
AMD Stock’s Price Performance
Image Source: Zacks Investment Research
Expanding Data Center Footprint Boosts AMD’s Prospects
AMD is entering a stronger growth phase as AI infrastructure demand shifts the company’s mix toward the Data Center segment, revenues from which surged 57% year over year to $5.8 billion, driven by EPYC CPUs and Instinct GPUs. AMD’s core upside case is that AI inference and agentic AI are expanding demand not only for GPUs, but also for high-performance server CPUs used for orchestration, data movement, and head-node workloads.
AMD delivered its fourth consecutive quarter of record server CPU revenues in the first quarter of 2026, as the figure increased more than 50% year-over-year with sales to both cloud and enterprise customers each growing more than 50%. Share gains accelerated year-over-year, reflecting the ramp of fifth-gen EPYC Turin CPUs and the continued strength of fourth-gen EPYC processors across a wide range of workloads. The company now expects the server CPU total addressable market to be more than $120 billion by 2030 (growth of more than 35% annually) and expects server CPU revenue to grow more than 70% year over year in Q2. Verano, AMD’s first EPYC CPU purpose-built for AI infrastructure, is likely to boost the company’s server market share.
EPYC adoption is increasing as it is supporting a broad range of AI workloads from general-purpose compute and data processing to head nodes for accelerators and emerging Agentic applications. EPYC-powered cloud instances increased nearly 50% year-over-year to more than 1,600 in the first quarter of 2026. In enterprise, AMD is benefiting from an expanding small and medium business clientele with expansion across financial services, health care, industrial and digital infrastructure companies.
AMD’s AI accelerator opportunity is improving, supported by large-scale engagements with Meta and OpenAI, and growing MI450/Helios customer interest. Data Center AI business revenues jumped by a significant double-digit percentage year-over-year as adoption of Instinct accelerates across cloud, enterprise, sovereign and supercomputing customers in the first quarter of 2026. The company is confident in delivering tens of billions of dollars of annual Data Center AI revenues in 2027.
AMD’s Earnings Estimate Revision Shows Rising Trend
The Zacks Consensus Estimate for second-quarter 2026 earnings is pegged at $1.60 per share, up 11.1% over the past 30 days. AMD reported earnings of 48 cents in the year-ago quarter.
Advanced Micro Devices, Inc. Price and Consensus
Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote
The consensus mark for 2026 earnings is pegged at $7.18 per share, up 8.5% over the past 30 days, suggesting 72.2% growth from 2025’s reported figure.
AMD’s Gross Margins Under Pressure from Unfavorable Mix
AMD expects the ramp of MI450 beginning the third quarter of 2026 and into the fourth quarter to hurt gross margin expansion.
In the first quarter of 2026, gross margin expanded 170 basis points (bps) to 55%, driven by a favorable product mix, including a higher data center revenue contribution. For the second quarter of 2026, AMD expects gross margin to be roughly 56%, driven by higher CPU sales.
AMD also expects PC shipments to be lower in the second half due to higher memory and component costs. This is expected to hurt higher margin client revenues, likely putting gross margin under pressure. Moreover, lower-margin gaming revenues are also expected to decline due to higher memory and component costs.
AMD Shares are Overvalued
AMD shares are overvalued, as suggested by a Value Score of F. The AMD stock is trading at a forward 12-month price/earnings (P/E) of 53.06X compared with the broader sector’s 25.45X.
AMD shares are trading at a premium compared with peers, including NVIDIA and Broadcom. Shares of NVIDIA and Broadcom are trading at a P/E multiple of 24.96 and 28.28, respectively.
AMD Stock’s Valuation
Image Source: Zacks Investment Research
Here’s Why AMD Stock is a Hold Now
AMD’s expanding portfolio and growing data center AI footprint are expected to improve its top-line growth over the long term. So, investors currently holding the stock should stay put.
However, AMD’s near-term prospects are limited given stiff competition. Stretched valuation is a concern for investors.
AMD currently has a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.