Advanced Micro Devices Inc. (NASDAQ: AMD) is solidifying its position in the AI infrastructure buildout, with record first-quarter results sending its stock to an all-time high on May 16. The chipmaker’s data center revenue surged 57 percent from a year earlier, driven by stronger-than-expected demand for its server CPUs and AI accelerators, a sign that its challenge to Nvidia’s dominance is gaining traction.
"Inferencing and agentic AI are increasing the need for server CPU compute," AMD Chief Executive Officer Lisa Su said on the company’s May 5 earnings call, highlighting the drivers behind the segment’s performance. The company noted that major cloud providers including Amazon, Google, and Microsoft have been increasing their use of AMD’s Epyc server processors.
The strong quarter pushed AMD’s revenue to $10.25 billion, beating Wall Street consensus estimates of $9.89 billion, while adjusted earnings per share came in at $1.37, ahead of the expected $1.29. The performance was powered by the data center segment, though the client division also grew a respectable 23 percent. Following the report, AMD’s stock has risen over 25 percent, part of a 262 percent gain over the past year that has pushed its market capitalization to $731 billion.
The results show how demand for generative AI is creating opportunities beyond just market leader Nvidia. AMD is gaining ground in the server CPU market, a space long dominated by Intel. According to market data, AMD’s unit share of server processors reached 27.4 percent in the first quarter of 2026. This share gain is supported by major commitments from hyperscalers, with Meta Platforms set to be a lead customer for AMD’s next-generation Epyc CPUs while also deploying its Instinct data center GPUs.
AI Demand Fuels Upgraded Forecast
The surge in AI-related demand prompted AMD to nearly double its long-term outlook for the server CPU market. Management now projects the market will grow at an annual rate of over 35 percent, reaching $120 billion by 2030, up from a previous estimate of 18 percent.
For its own business, AMD guided for second-quarter revenue of $11.2 billion, which would represent 46 percent year-over-year growth, an acceleration from the first quarter’s 38 percent expansion. The company also expects non-GAAP gross margin to expand by 13 percentage points to 56 percent, signaling significant bottom-line improvement. Analysts now project AMD’s earnings could jump 76 percent for the full year.
Valuation in Focus
The stock’s rapid ascent has pushed its valuation to premium levels. AMD trades at more than 60 times projected forward earnings, a figure significantly higher than the Nasdaq Composite index average and well above Nvidia’s forward multiple of 26.
While the high valuation gives some investors pause, bulls argue it is justified by the company’s accelerating growth and expanding addressable market. Analysts project AMD’s revenue could double to over $100 billion by 2028. If the company maintains its sales multiple, which currently sits at 20 times sales, it could approach a trillion-dollar market capitalization sooner than expected. The key question for investors is whether AMD can continue to execute against its powerful rivals and convert its growing market share into the sustained earnings growth currently priced into the stock.
This article is for informational purposes only and does not constitute investment advice.
