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AMD Rides on Strong AI Infrastructure Growth: More Upside Ahead?
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Key Takeaways
AMD Data Center revenues jumped 57% year over year to a record $5.8B in Q1 2026.
AMD is seeing strong demand for EPYC processors and Instinct accelerators in AI workloads.
AMD expects its Data Center AI business to generate tens of billions in annual revenues by 2027.
Advanced Micro Devices (AMD - Free Report) is experiencing accelerating momentum from the expanding AI infrastructure market, with Data Center emerging as the company’s primary growth engine. In the first quarter of 2026, Data Center revenues surged 57% year over year to a record $5.8 billion, driven by strong demand for EPYC server processors and Instinct AI accelerators. Server CPU revenues increased more than 50% year over year for the fourth consecutive quarter, supported by robust cloud and enterprise adoption of fifth-generation EPYC Turin processors and continued demand for fourth-generation EPYC products.
It is worth noting that the rapid scaling of AI workloads is creating a structural increase in demand for high-performance CPUs. Inferencing and agentic AI applications require significant CPU compute for orchestration, data movement, parallel execution and accelerator management. As a result, AMD now expects the server CPU total addressable market to grow more than 35% annually and exceed $120 billion by 2030, double its previous outlook. The company believes its expanding EPYC portfolio, including the sixth-generation Venice family and AI-optimized Verano processors, positions it to capture additional market share across cloud, enterprise and AI infrastructure deployments.
AMD is also strengthening its position in AI accelerators. Adoption of Instinct GPUs is accelerating as customers move from pilot projects to large-scale production deployments, particularly for inference workloads, where AMD’s memory capacity and bandwidth provide advantages. Strategic partnerships with Meta and OpenAI further enhance visibility into future demand. Meta plans to deploy up to six gigawatts of AMD Instinct GPUs across multiple generations, including custom accelerators based on the MI450 architecture.
The company has begun ramping its next-generation AI infrastructure platform built around Instinct GPUs, EPYC Venice processors and the Helios rack-scale architecture. Customer demand for MI450 and Helios continues to exceed initial expectations, driven by growing engagement from hyperscalers and AI-native customers. Supported by expanding supply-chain capacity and strengthening customer forecasts, AMD expects its Data Center AI business to generate billions of dollars in annual revenues by 2027, underscoring significant long-term upside from the AI infrastructure boom. For the second quarter of 2026, AMD expects revenues to be approximately $11.2 billion, plus or minus $300 million.
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 rapidly as customers work to expand their AI infrastructure. Data Center revenues of NVIDIA 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 delivered exceptional AI-driven growth in the second quarter of fiscal 2026, with AI semiconductor revenues reaching a record $10.8 billion, up 143% year over year and above guidance. AI semiconductor bookings exceeded $30 billion during the second quarter of fiscal 2026. Networking accounted for nearly 40% of AI revenues, reflecting strong adoption of Broadcom’s AI connectivity solutions. Broadcom expects AI semiconductor revenues to rise to $16 billion in the third quarter, while projecting approximately $56 billion in AI revenues for fiscal 2026 and more than $100 billion in fiscal 2027.
AMD shares have jumped 129% year to date, outperforming the broader Zacks Computer and Technology sector’s rise of 16.2%.
AMD Stock’s Price Performance
Image Source: Zacks Investment Research
AMD stock is overvalued, with a forward 12-month price/sales of 13.78X compared with the broader sector’s 6.59X. 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, unchanged over the past 30 days, suggesting 233.3% year-over-year growth.
View the Zacks #1 Rank List
Image: Bigstock
AMD Rides on Strong AI Infrastructure Growth: More Upside Ahead?
Key Takeaways
Advanced Micro Devices (AMD - Free Report) is experiencing accelerating momentum from the expanding AI infrastructure market, with Data Center emerging as the company’s primary growth engine. In the first quarter of 2026, Data Center revenues surged 57% year over year to a record $5.8 billion, driven by strong demand for EPYC server processors and Instinct AI accelerators. Server CPU revenues increased more than 50% year over year for the fourth consecutive quarter, supported by robust cloud and enterprise adoption of fifth-generation EPYC Turin processors and continued demand for fourth-generation EPYC products.
It is worth noting that the rapid scaling of AI workloads is creating a structural increase in demand for high-performance CPUs. Inferencing and agentic AI applications require significant CPU compute for orchestration, data movement, parallel execution and accelerator management. As a result, AMD now expects the server CPU total addressable market to grow more than 35% annually and exceed $120 billion by 2030, double its previous outlook. The company believes its expanding EPYC portfolio, including the sixth-generation Venice family and AI-optimized Verano processors, positions it to capture additional market share across cloud, enterprise and AI infrastructure deployments.
AMD is also strengthening its position in AI accelerators. Adoption of Instinct GPUs is accelerating as customers move from pilot projects to large-scale production deployments, particularly for inference workloads, where AMD’s memory capacity and bandwidth provide advantages. Strategic partnerships with Meta and OpenAI further enhance visibility into future demand. Meta plans to deploy up to six gigawatts of AMD Instinct GPUs across multiple generations, including custom accelerators based on the MI450 architecture.
The company has begun ramping its next-generation AI infrastructure platform built around Instinct GPUs, EPYC Venice processors and the Helios rack-scale architecture. Customer demand for MI450 and Helios continues to exceed initial expectations, driven by growing engagement from hyperscalers and AI-native customers. Supported by expanding supply-chain capacity and strengthening customer forecasts, AMD expects its Data Center AI business to generate billions of dollars in annual revenues by 2027, underscoring significant long-term upside from the AI infrastructure boom. For the second quarter of 2026, AMD expects revenues to be approximately $11.2 billion, plus or minus $300 million.
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 rapidly as customers work to expand their AI infrastructure. Data Center revenues of NVIDIA 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 delivered exceptional AI-driven growth in the second quarter of fiscal 2026, with AI semiconductor revenues reaching a record $10.8 billion, up 143% year over year and above guidance. AI semiconductor bookings exceeded $30 billion during the second quarter of fiscal 2026. Networking accounted for nearly 40% of AI revenues, reflecting strong adoption of Broadcom’s AI connectivity solutions. Broadcom expects AI semiconductor revenues to rise to $16 billion in the third quarter, while projecting approximately $56 billion in AI revenues for fiscal 2026 and more than $100 billion in fiscal 2027.
AMD’s Share Price Performance, Valuation & Estimates
AMD shares have jumped 129% year to date, outperforming the broader Zacks Computer and Technology sector’s rise of 16.2%.
AMD Stock’s Price Performance
Image Source: Zacks Investment Research
AMD stock is overvalued, with a forward 12-month price/sales of 13.78X compared with the broader sector’s 6.59X. 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, unchanged 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.