Key Takeaways:
- AMD’s data center revenue jumped from $3.69 billion in 2021 to $16.64 billion in 2025, and new AI chips plus Helios rack systems are driving fresh demand from OpenAI, Meta, and Anthropic.
- AMD now holds a record 46% revenue share in server processors, taking business from Intel as agentic AI drives demand for more CPU power alongside GPUs.
- AMD’s valuation looks steep on the surface, but earnings are projected to grow so fast that the stock could look reasonably priced in hindsight, though Nvidia’s software lead remains a real risk.
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Advanced Micro Devices (AMD) makes the brains of computers. Its processors and graphics chips power data centers, PCs, and gaming consoles around the world.
Now the company wants a much bigger piece of the artificial intelligence boom. Its newest AI chips are a direct challenge to Nvidia, the chip maker that currently dominates the market.
AMD’s stock has already had a strong run, closing recently around $485 per share. But investors weighing whether to buy in 2026 should look past simple valuation math.
AMD’s profits swing a lot from year to year, so a basic price-to-earnings comparison can be misleading. A better approach is watching how fast its data center segment grows and whether its overall business is shifting toward higher-value AI products.
Here are three reasons AMD could be the AI chip stock worth owning next year, along with the risks that keep this from being a sure thing.
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AMD’s AI data center chips are gaining real traction
AMD’s data center segment has grown from $3.69 billion in revenue in 2021 to $16.64 billion in 2025, according to TIKR data. Operating income in that segment also climbed from under $1 billion to $3.60 billion over the same stretch.
That growth is being driven partly by the company’s newest AI accelerators and its Helios rack systems, which package chips, processors, and networking together for AI companies. At AMD’s Advancing AI event on July 23, CEO Lisa Su said Helios shipments are set to begin in September and ramp through the rest of the year.
The order pipeline behind that ramp is worth watching closely. AMD has landed multi-year, multi-gigawatt supply deals with OpenAI, Meta, and Anthropic. Su confirmed on the call that Anthropic plans to deploy up to 2 gigawatts of AMD hardware, with the first gigawatt largely shipping in 2027.
“We’re seeing every major server OEM, every major cloud provider on track to begin rolling out in the fourth quarter,” Su said of the related Venice CPU launch, adding that customer demand is “the strongest we’ve ever seen for a new EPYC generation.”
Anthropic co-founder Tom Brown also spoke at the event about testing AMD’s hardware. He described an engineer who connected AMD’s chip to Anthropic’s Claude model and let it run unattended over a weekend.
“We ended up with a graph of the actual performance of our leading model on it just going up and up and up over the weekend,” Brown said.
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AMD keeps taking market share from Intel
AMD’s other core business, server and PC processors, is also expanding. The company said it reached a record 46% revenue share in the server CPU market in the first quarter of 2026, largely at the expense of longtime rival Intel.
Chief Financial Officer Jean Hu told investors at the Bank of America Global Technology Conference in June that AMD’s CPU business grew more than 50% in the first quarter, with 70% year-over-year growth guided for the second quarter.
She credited agentic AI, where software agents handle multi-step tasks that require heavy CPU support alongside GPUs.
AMD has raised its own long-term forecast for the server CPU market twice this year, most recently to over $200 billion by 2030, up from an original estimate of $60 billion. Management believes AMD can capture more than half of that market.
Is AMD stock undervalued?
AMD’s forward price-to-normalized-earnings ratio recently sat at 54.46x, above its five-year average of 34.17x, per TIKR charting data. That is not cheap on its own.
But AMD’s earnings per share are forecast to jump from $4.17 in 2025 to $37.60 by 2030, according to TIKR estimates, a pace that could make today’s multiple look reasonable in hindsight if the company executes.
A TIKR valuation model built on mid-range assumptions points to a potential target price near $2,025 by the end of 2030, implying annualized returns above 38%.
That scenario assumes revenue growth near 42% annually and net income margin expanding to nearly 32%. Those are optimistic assumptions, not guarantees, and slower AI spending or execution missteps could easily derail them.
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The bear case investors should not ignore
AMD still trails Nvidia by a wide margin in AI chip market share, and Nvidia’s CUDA software platform keeps many developers locked into its ecosystem. Switching costs are real, and AMD’s ROCm software stack, while improving quickly according to executives, has ground to make up.
Memory costs are also rising industry-wide, and AMD’s own gross margins on AI chips remain below its corporate average as new products ramp.
Investors should treat AMD as a high-growth story with real execution risk attached, not a guaranteed winner.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
