Advanced Micro Devices’ (AMD) Profits are on a Breathtaking Climb Higher

Stock (Symbol)

Advanced Micro Devices (AMD)

Stock Price

$483

Sector

Data is as of

Expected to Report

Company Description

Advanced Micro Devices, Inc. is a global semiconductor company. Its segments include Computing and Graphics, and Enterprise, Embedded and Semi-Custom.

The Computing and Graphics segment primarily includes desktop and notebook microprocessors, accelerated processing units that integrate microprocessors and graphics, chipsets, discrete graphics processing units (GPUs), data center and professional GPUs, and development services.

It may also sell or license portions of its intellectual property (IP) portfolio.

The Enterprise, Embedded and Semi-Custom segment primarily includes server and embedded processors, semi-custom system-on-chip (SoC) products, development services, and technology for game consoles, and it may also sell or license portions of its IP portfolio.

Its microprocessor customers consist primarily of original equipment manufacturers (OEMs), large public cloud service providers, original design manufacturers (ODMs), system integrators, and independent distributors. Source: Refinitiv

Sharek’s Take

• 2025 $4.17
• 2026 $7.67e
• 2027 $15.61e
• 2028 $22.44e

Advanced Micro Devices is a semiconductor company focused on high-performance computing technology, software, and products. It develops high-performance CPUs and GPUs and integrates these with hardware and software. CPUs are used for client systems, high-performance computing, and cloud computing. GPUs are used for gaming, artificial intelligence, and virtual reality. AMD is launching some high octane Instinct GPUs:

• MI350P for servers, launched in May 2026.
• MI455X for High Performance Computing (HPC), launched in July 2026.
• MI430X for Artificial Intelligence (AI), expected to launch in ealy 2027. The Instinct MI430x GPU is expected to have 9x more capacity than NVIDIA’s Rubin (source: HPCwire).

The company has four business segments, here’s some info from last qtr:

• Datacenter: EPYC CPUs and Instinct GPUs for servers in data centers.
  • 58% of company revenue last qtr with 107% revenue growth year-over-year (yoy).
  • Growth in revenue was driven by strong demand for EPYC processors and the continued ramp of Instinct GPUs.
• Client: Ryzen processors for notebooks, desktop PCs, and commercial workstations.
  • 27% of total company revenue, 23% revenue growth year-over-year.
  • Growth is primarily driven by record mobile processor revenue, favorable product mix, and continued share gains across consumer and commercial markets.
• Gaming: Radeon processors for desktops, notebooks, and game consoles.
  • 7% of revenue, -31% revenue growth.
  • The decline was primarily driven by lower semi-custom sales at this stage of the console cycle.
• Embedded: products for embedded platforms to support high-performance network connectivity.
  • 8% of AMD revenue last qtr, 19% revenue growth.
  • Growth in revenue was primarily driven by broad-based demand across several end markets

AMD has an excellent Estimated Long Term Growth Rate of 61% per year but a high P/E of 63. Although AMD doesn’t pays a dividend, management buys back stock. In 2025, management bought back 12.4 million shares and returned $1.3 billion to shareholders. The demand for compute has never been greater, and the profit estimates shows how much bigger the next phase will be. AMD made $4.17 in profits in 2025. Annual Profit Estimates are for $7.67 for 2026, $15.57 in 2027, and $22.44 for 2028. The stock could be a huge winner from AI spending in the coming years. AMD is part of the Focus List and Growth Portfolio.

One Year Chart

AMD has a P/E of 63 this qtr. up from 62 last qtr. My Fair Value is a P/E of 42. I think the stock is expensive.

The Est. LTG is an amazing 61%, up from 56% last qtr.

Qtrly profit growth just accelerated in a big way. Qtrly Estimates look good too.

Earnings Table

Last qtr, AMD delivered 246% profit growth and beat expectations of 233%. Revenue increased 50%, year-over-year versus estimates of 46%. Gross margin was 56% compared to 43% a year ago. Operating margin was 27% compared to 12% a year ago.

• In server, AMD delivered its fifth consecutive quarter of record server CPU revenue with cloud and enterprise sales each growing more than 70% year-over-year.
• In Datacenter AI business, revenue grew 107%, driven by strong demand for Instinct accelerators. Datacenter was 58% of total revenue, up from 42% a year ago.
• AMD plans to launch a new rack scale AI platform every year, with each generation delivering significant performance gains.
• In 2027, the MI500 is expected to deliver the largest generational leap in Instinct history. It’s on track to increase inference performance more than 2000x in just 4 years.
• Management expects the AI accelerator market to grow at least 45% a year by 2030.

Annual Profit Estimates increased this qtr. Notice profits are expected to climb exponentially.

Qtrly profit Estimates are for 62%, 73%, 119%, and 113% growth in the next four qtrs as AI products scale up. Analysts estimate 41% revenue growth next quarter.

Fair Value

With AMD at $483 this qtr, the stock has P/E of 63. 

My Fair Value is a P/E of 42, that’s $322 a share. So the stock seems overvalued right now.

But when we look to 2027, my Fair Value is $654, giving the stock upside of 35%.

Bottom Line

Advanced Micro Devices (AMD) grew profits nicely during 2017 – 2022. Profits failed to hit new highs in 2023 and 2024, as the stock was choppy. Now the shares have gone parabolic.

AMD is seeing accelerating demand for its Datacenter chips. And these new Instinct MI430x GPUs could be better than NVIDIA’s. Maybe that’s why AMD stock has been ramping higher while NVDA has been lagging?

AMD moves up from 14th to 11th in the Growth Portfolio Power Rankings.

The stock stays at 9th in Focus List Power Rankings.

Power Rankings

11 of 31

Focus List

9 of 15

Conservative Stock Portfolio

N/A