Advanced Micro Devices (AMD) has seen a turbulent year with its stock dropping over 20%, but recent developments indicate a potential turnaround. Since reaching a 52-week low on April 8, shares have surged by 61%. The question remains: can AMD sustain this upward trajectory and deliver substantial gains in the coming years?
Recent financial reports paint a positive picture for AMD. The company reported a remarkable 36% year-over-year revenue growth in the first quarter of 2025, with forecasts suggesting another strong increase of 27% in the current quarter. Key to this growth are AMD’s data center and client processor segments, particularly driven by demand for its GPUs and CPUs, especially in the AI sector.
The data center business is experiencing a significant boost, with a 57% increase in revenue in Q1 alone, largely attributed to cloud computing clients utilizing AMD’s products for AI training and inference. Notably, AMD highlighted a massive growth opportunity in the AI accelerator market, which is expected to grow at an astounding annual rate of over 60% until 2028, potentially generating over $500 billion in revenue in that time frame.
Although Nvidia currently dominates the data center market, AMD is making strides with its new MI350 series of GPUs, boasting four times the computing power of its predecessors and a 35-fold increase in AI inferencing capabilities. Analysts believe these advancements may help AMD capture a larger share of the market, which is currently at only 4%. Achieving as little as a 10% market share by 2030 could see AMD’s data center GPU revenue soar to $50 billion.
Beyond data centers, AMD is positioned to benefit from the next generation of gaming consoles, with contracts in place to supply chips for Sony’s PlayStation 6 and Microsoft’s upcoming Xbox. This aligns AMD with several lucrative markets as it heads into the next decade.
With AMD’s price/earnings-to-growth (PEG) ratio sitting at a low 0.69, indicating potential undervaluation, analysts project solid earnings growth. If AMD can maintain an earnings growth rate of 15% beyond 2027, estimates suggest earnings per share could reach $10.57, driving the stock price up to approximately $264—a potential 112% increase from current levels.
Investors looking for an opportunity in the tech sector may find AMD’s solid growth prospects particularly appealing. With key developments in both AI and gaming, AMD is positioning itself for a promising future that could lead to significant returns.