Advanced Micro Devices reported a 50% revenue increase and a 107% jump in data center revenue in its second quarter, as its new MI450 GPU series begins shipping to major customers like OpenAI and Meta.
AMD's stock, already up 200% over the past 12 months, trades at a high valuation today but may look attractive to longer-term investors if CEO Lisa Su's forecast of a $1.4 trillion annual AI data center chip market by 2030 comes true.
What happened
AMD reported record $11.5 billion in second-quarter revenue (up 50% year-over-year), with its data center business generating $6.7 billion and growing 107%. The company is starting to ship its MI450 series GPUs, expected to rival Nvidia's Vera Rubin chips, and has secured major customers including OpenAI, Meta, Microsoft, and Anthropic for upcoming deployments.
Why it matters
AMD's adjusted earnings soared 246% to $1.66 per share in the quarter, driven by a shortage of AI data center hardware that lets suppliers dictate prices. CEO Lisa Su projects the AI data center chip market will grow to $1.4 trillion annually by 2030, and expects AMD's data center revenue to more than double again in 2027—suggesting the company has captured only a fraction of its opportunity despite its 200% stock gain over the past 12 months.
What to watch
AMD's stock trades at a P/E ratio of 83.6 (more than double Nvidia's 33.5), but Wall Street forecasts adjusted earnings of $13.92 per share in 2027, which would put the forward P/E at 34.6. The MI450 paired with AMD's Helios rack is expected to be 15% more powerful and 30% more cost-efficient than competitors when it starts shipping in the next few months; the MI500 series is due in 2027.
On August 4, AMD released its operating results for the 2026 second quarter, revealing substantial gains across the board. The company generated record revenue of $11.5 billion, a 50% increase from the year-ago period. The data center business was the driver, contributing more than half of total revenue at $6.7 billion and posting a 107% year-over-year increase. AMD's adjusted earnings (a non-GAAP measure) soared 246% to $1.66 per share, powered by a shortage of AI data center hardware that has allowed suppliers to command premium pricing.
AMD's competitive position has strengthened substantially since entering the AI data center race in 2023. The company's MI300X GPU was designed to compete with Nvidia's H100, but Nvidia's subsequent launch of its Blackwell architecture extended its lead. AMD has since closed the gap, capturing several of Nvidia's top customers including Oracle, Microsoft, OpenAI, and others. The company's new MI450 series GPUs are widely expected to be a comparable alternative to Nvidia's upcoming Vera Rubin chips and will begin shipping in the next few months. When paired with AMD's new Helios rack—which includes specialized CPUs and networking components—the MI450 can deliver 15% more power and 30% greater cost efficiency than competing systems. The company is already developing its MI500 series for launch in 2027; CEO Lisa Su stated it could produce 2,000 times more performance in inference workloads (the step where an AI produces an answer) compared to the original MI300X. OpenAI and Meta Platforms will each deploy 6 gigawatts of computing capacity using AMD's GPUs over the next few years, starting with MI450 and Helios. Su confirmed that Anthropic and Microsoft will also be deploying MI450 GPUs in Helios racks, building an impressive customer roster.
Su projects the AI data center chip market will grow to $1.4 trillion annually by 2030, and she now expects AMD's data center revenue to more than double in 2027. Yet AMD's valuation has risen steeply: at an adjusted trailing-12-month price-to-earnings ratio of 83.6, it trades at more than double Nvidia's P/E of about 33.5. Wall Street's average forecast, however, suggests adjusted earnings could reach $13.92 per share in 2027, giving the stock a forward P/E of just 34.6. For investors planning to hold the stock for at least 18 months, this forward multiple may offer appeal. For those seeking shorter-term gains, the stock's 200% return over the past 12 months likely reflects most near-term upside and carries risk if the AI infrastructure spending boom slows or Su's revenue forecasts slip.
AMD has shifted from a laggard in the AI data center GPU race—where it trailed Nvidia's dominance upon entering in 2023—to a formidable competitor. The company has won over several of Nvidia's top customers, and its new MI450 series, when paired with the Helios rack, delivers tangible performance and cost advantages: 15% more power and 30% greater cost efficiency than competing systems. CEO Lisa Su's roadmap is ambitious: the MI500 series due in 2027 is projected to deliver 2,000 times more performance in inference workloads compared to the original MI300X, underscoring rapid progress. The current hardware shortage in AI data centers is working in AMD's favor, allowing the company to command premium pricing and driving adjusted earnings up 246% in the latest quarter.
However, AMD's stock valuation has moved sharply ahead of current earnings: at a P/E ratio of 83.6, it trades at more than 2.5 times Nvidia's multiple of 33.5. The critical question for investors is whether this premium is justified by future growth. Wall Street's consensus forecast—which projects adjusted earnings of $13.92 per share in 2027—implies a forward P/E of 34.6, suggesting the stock could be fairly valued for investors with a multi-year horizon. Su's statement that the AI data center chip market could reach $1.4 trillion annually by 2030, combined with her expectation that AMD's data center revenue will more than double in 2027, provides a concrete growth narrative. For short-term traders, the stock's 200% rally over 12 months likely has priced in near-term momentum; for patient shareholders, the valuation may offer reasonable upside if AMD sustains its trajectory and the AI infrastructure spending boom continues.
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