AMD stock falls with chip sector, but high valuation leaves little room for disappointment

AMD's data center revenue jumped 57% year-over-year to $5.8 billion in Q1 2026, accelerating from 39% growth in Q4 2025, and now accounts for more than half of AMD's total revenue. The company guided for Q2 2026 revenue of about $11.2 billion, implying approximately 46% year-over-year growth.

AMD's Instinct MI450 accelerators and Helios rack systems are set to begin ramping in the second half of 2026. Meta Platforms has agreed to deploy up to 6 gigawatts of AMD Instinct GPUs, with the first wave built on custom MI450 silicon, a commitment that could sustain data center growth into 2027.

AMD stock trades at a price-to-earnings ratio north of 100 on a trailing non-GAAP basis. Risks include potential pressure in the PC and gaming business from rising memory and component costs in the second half of the year, margin compression as the MI450 ramps, and reliance on Taiwan Semiconductor Manufacturing for advanced chip capacity.