AMD stock has surged over 300% in 12 months as data center demand for AI chips accelerates, but analysts question valuation and long-term sustainability.

AMD's first-quarter revenue jumped 38% year over year to $10.25 billion, with its data center segment rising 57% to $5.8 billion, driven by demand for AMD EPYC processors (CPUs for cloud computing) and Instinct GPUs (for AI model training and inference).

Unlike Nvidia, which derives over 90% of sales from its data center segment, AMD's data center segment contributes a relatively modest 57% to its top line, giving the company more diversification across CPUs, GPUs, and networking equipment.

AMD trades at a forward price-to-earnings multiple of 74 compared to the Nasdaq-100's average estimate of 27, and its gross margin of 53% trails Nvidia's 74.9%, raising concerns about whether current data center spending levels are sustainable over the long term.