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AMD's Data Center Growth Rides on EPYC Demand: More Upside Ahead?
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Key Takeaways
AMD says data center revenues hit $5.78B, up 57% y/y, on EPYC server CPUs and Instinct GPUs.
AMD expects server CPU revenues to rise 70% y/y in Q2, with strong growth continuing into 2027.
AMD ramps Helios with MI350 and EPYC Venice; MI450 demand tops plans, eyeing "tens of billions" by 2027.
Advanced Micro Devices (AMD - Free Report) is riding on strong Data Center revenues, which reached $5.78 billion, up 57.2% year over year. The top-line benefited from strong demand for EPYC processors and Instinct GPUs. AMD stated that first-quarter 2026 server CPU revenue grew more than 50% year over year for the fourth consecutive quarter, supported by the rapid adoption of fifth-generation EPYC Turin processors and sustained demand for fourth-generation EPYC chips across cloud and enterprise workloads.
The company also emphasized that AI adoption is materially increasing demand for high-performance CPUs alongside GPUs. AMD noted that inferencing and Agentic AI workloads require significant CPU compute for orchestration, data movement and parallel execution, making EPYC processors increasingly central to AI infrastructure buildouts. As a result, AMD raised its long-term outlook for the server CPU total addressable market, now expecting it to grow more than 35% annually to exceed $120 billion by 2030.
AMD believes EPYC’s expanding portfolio — including the upcoming sixth-generation Venice family and AI-optimized Verano processors — positions AMD to capture substantial market share gains as hyperscalers deploy broader AI compute architectures. Management indicated that server CPU revenues are expected to grow more than 70% year over year in the second quarter, with strong growth continuing into 2027 as new EPYC products ramp. The company also noted that EPYC processors are helping expand gross margins because of their favorable product mix and increasing adoption across enterprise and cloud customers.
AMD recently announced that it has begun the production ramp of its next-generation AI infrastructure platform built around the upcoming Instinct MI350 Series GPUs and sixth-generation EPYC “Venice” processors. The company stated that the platform integrates its Helios rack-scale architecture, which combines EPYC CPUs and Instinct accelerators to optimize AI training and inference workloads at hyperscale. AMD also confirmed that customer demand for the MI450 and Helios platforms continues to exceed initial expectations, with deployments spanning major cloud and AI customers, including strategic engagements with Meta and OpenAI.
The launch of Venice-based AI systems also reinforces EPYC’s importance in next-generation AI architectures, particularly as AI workloads increasingly require balanced CPU-GPU compute configurations rather than GPU-only deployments. The production ramp further improves AMD’s visibility into future revenue growth. Management indicated that customer forecasts for MI450 and Helios are already exceeding initial plans, supporting expectations for “tens of billions” of dollars in annual data center AI revenue by 2027.
Tough Competition Hurts AMD’s Prospects
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. Data Center revenues reached $75.2 billion in the first quarter of fiscal 2027, up 92% from a year ago and up 21% sequentially, driven by the ramp-up of Blackwell 300 products and demand for InfiniBand, Spectrum-X Ethernet and NVLink solutions.
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. Broadcom expects second-quarter fiscal 2026 AI revenues to surge 140% year over year to $10.7 billion.
AMD shares have jumped 131.5% year to date, outperforming the broader Zacks Computer and Technology sector’s rise of 19.4%.
AMD Stock’s Price Performance
Image Source: Zacks Investment Research
AMD stock is overvalued, with a forward 12-month price/sales of 14.61X compared with the broader sector’s 6.83X. AMD has a Value Score of F.
AMD Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for second-quarter 2026 earnings is pegged at $1.60 per share, up 11.1% over the past 30 days, suggesting 233.3% year-over-year growth.
View the Zacks #1 Rank List
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AMD's Data Center Growth Rides on EPYC Demand: More Upside Ahead?
Key Takeaways
Advanced Micro Devices (AMD - Free Report) is riding on strong Data Center revenues, which reached $5.78 billion, up 57.2% year over year. The top-line benefited from strong demand for EPYC processors and Instinct GPUs. AMD stated that first-quarter 2026 server CPU revenue grew more than 50% year over year for the fourth consecutive quarter, supported by the rapid adoption of fifth-generation EPYC Turin processors and sustained demand for fourth-generation EPYC chips across cloud and enterprise workloads.
The company also emphasized that AI adoption is materially increasing demand for high-performance CPUs alongside GPUs. AMD noted that inferencing and Agentic AI workloads require significant CPU compute for orchestration, data movement and parallel execution, making EPYC processors increasingly central to AI infrastructure buildouts. As a result, AMD raised its long-term outlook for the server CPU total addressable market, now expecting it to grow more than 35% annually to exceed $120 billion by 2030.
AMD believes EPYC’s expanding portfolio — including the upcoming sixth-generation Venice family and AI-optimized Verano processors — positions AMD to capture substantial market share gains as hyperscalers deploy broader AI compute architectures. Management indicated that server CPU revenues are expected to grow more than 70% year over year in the second quarter, with strong growth continuing into 2027 as new EPYC products ramp. The company also noted that EPYC processors are helping expand gross margins because of their favorable product mix and increasing adoption across enterprise and cloud customers.
AMD recently announced that it has begun the production ramp of its next-generation AI infrastructure platform built around the upcoming Instinct MI350 Series GPUs and sixth-generation EPYC “Venice” processors. The company stated that the platform integrates its Helios rack-scale architecture, which combines EPYC CPUs and Instinct accelerators to optimize AI training and inference workloads at hyperscale. AMD also confirmed that customer demand for the MI450 and Helios platforms continues to exceed initial expectations, with deployments spanning major cloud and AI customers, including strategic engagements with Meta and OpenAI.
The launch of Venice-based AI systems also reinforces EPYC’s importance in next-generation AI architectures, particularly as AI workloads increasingly require balanced CPU-GPU compute configurations rather than GPU-only deployments. The production ramp further improves AMD’s visibility into future revenue growth. Management indicated that customer forecasts for MI450 and Helios are already exceeding initial plans, supporting expectations for “tens of billions” of dollars in annual data center AI revenue by 2027.
Tough Competition Hurts AMD’s Prospects
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. Data Center revenues reached $75.2 billion in the first quarter of fiscal 2027, up 92% from a year ago and up 21% sequentially, driven by the ramp-up of Blackwell 300 products and demand for InfiniBand, Spectrum-X Ethernet and NVLink solutions.
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. Broadcom expects second-quarter fiscal 2026 AI revenues to surge 140% year over year to $10.7 billion.
AMD’s Share Price Performance, Valuation & Estimates
AMD shares have jumped 131.5% year to date, outperforming the broader Zacks Computer and Technology sector’s rise of 19.4%.
AMD Stock’s Price Performance
Image Source: Zacks Investment Research
AMD stock is overvalued, with a forward 12-month price/sales of 14.61X compared with the broader sector’s 6.83X. AMD has a Value Score of F.
AMD Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for second-quarter 2026 earnings is pegged at $1.60 per share, up 11.1% over the past 30 days, suggesting 233.3% 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.