Advanced Micro Devices (AMD) shares have soared 75.8% year to date (YTD), significantly outpacing the Zacks Computer and Technology sector’s 12.6% return. Key drivers of this growth include strong demand for data center EPYC processors and Instinct GPUs, with data center revenue climbing 57% year-over-year to $5.8 billion. However, AMD faces intense competition from NVIDIA, Broadcom, and Intel, as these companies achieved YTD returns of 12.4%, 10.1%, and 89%, respectively.
In the first quarter of 2026, AMD experienced record server CPU revenues, surpassing 50% year-over-year growth and capitalizing on the demand for its fifth-gen EPYC Turin CPUs. The company’s server CPU total addressable market is projected to exceed $120 billion by 2030, reflecting a growth rate of over 35% annually. Despite this promising outlook, AMD anticipates gross margin pressure, expecting it to be around 56% for Q2 due to rising memory and component costs, alongside challenges in gaming revenue.
The Zacks Consensus Estimate for AMD’s Q2 earnings stands at $1.60 per share, an 11.1% increase over the past 30 days, while the consensus for 2026 earnings has risen to $7.18 per share, indicating a 72.2% growth from the previous year. Despite these positive forecasts, AMD’s valuation appears stretched, trading at a forward P/E of 53.06, compared to 25.45 for its sector, prompting suggestions for investors to hold their positions for now.
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
