AMD Shares Surge Amid AI Chip Demand
Advanced Micro Devices (NASDAQ: AMD) has seen its shares rise by 81% over the last three months as investors anticipate significant growth in the AI chip sector. Analysts project AMD’s earnings to increase at a 30% annualized rate in the coming years, largely propelled by its expanding data center offerings.
The data center market for AI accelerators is expected to exceed $500 billion by 2028, with an annual growth rate of over 60%. AMD’s data center revenue reached $13.9 billion last year, an 84% year-over-year increase, while Nvidia reported $131 billion from its data center segment. AMD’s strategic acquisitions, including Xilinx and Pensando Systems, are aimed at enhancing its chip lineup and addressing growing demand, despite Nvidia’s current market dominance.
Analysts forecast AMD’s total revenue to reach $44 billion by 2027, with earnings per share projected to grow to $7.12. While both AMD and Nvidia carry a similar forward price-to-earnings ratio of around 39, AMD’s ability to successfully execute its growth plans in a competitive landscape will be critical to its valuation and share price performance.
