Key Takeaways
- AMD projects 35% annual revenue growth over the next three to five years, led by booming demand for AI chips.
- The company expects its data-center AI business to expand about 80% per year, reaching “tens of billions” in sales by 2027.
- Despite bold forecasts, AMD shares slipped around 3% in extended trading.
- Partnerships with OpenAI, Meta, and Oracle underscore AMD’s push to challenge Nvidia’s dominance.
At its 2025 financial analyst day in New York, AMD CEO Lisa Su said the company expects overall sales to grow about 35% annually over the next three to five years — a forecast driven by what she called “insatiable” demand for artificial intelligence computing power.
Much of that momentum, Su explained, will come from AMD’s fast-growing AI data-center division, which the company projects could expand roughly 80% per year through 2027, putting it on track to generate tens of billions of dollars in sales. “This is what we see as our potential given the customer traction, both with the announced customers as well as those working closely with us,” Su told analysts.
AMD’s forecast comes as hyperscalers — including Microsoft, Meta, and Oracle — ramp up spending on chips to power large-scale AI systems. AMD, long known for its CPUs and gaming GPUs, is positioning itself as the key alternative to Nvidia, which still commands more than 90% of the AI accelerator market.
Su said AMD aims to capture “double-digit” market share in data-center AI chips within the next few years. The company’s current market capitalization, about $387 billion, remains a fraction of Nvidia’s $4.6 trillion, underscoring how much room AMD has to grow if it succeeds.
Expanding AI Partnerships
A major part of AMD’s new narrative is its October partnership with OpenAI): on 6 October 2025 AMD and OpenAI announced a multi-year agreement under which AMD will supply up to six gigawatts of its Instinct GPUs to OpenAI, beginning with a one-gigawatt deployment in the second half of 2026. The deal also gives OpenAI the option to acquire up to ~10% of AMD’s shares through warrants tied to milestones.
Su highlighted additional long-term supply agreements with Oracle and Meta, which further anchor AMD’s data-center roadmap.
AMD’s latest AI chips, the Instinct MI400X, are designed for rack-scale systems — 72 chips working as one unit — an architecture Su said is crucial for running next-generation large language models. Matching Nvidia’s own rack-scale systems, now in their third product generation, is a milestone AMD hopes to achieve next year.
Broader Business Still Growing
While AI dominated Tuesday’s presentation, Su emphasized that AMD’s legacy businesses remain strong. The company’s Epyc server CPUs continue to be the largest contributor to revenue, while its gaming and embedded segments are performing solidly. “Every other part of our business is firing on all cylinders,” Su said.
AMD also provided a welcome surprise for investors: its gross margins are expected to stay between 55% and 58% in the coming years — above Wall Street’s forecasts. Shares briefly rose on the margin outlook before slipping 3% in extended trading as investors digested the aggressive growth targets.
Market Outlook
AMD now sees the total market for AI data-center hardware hitting $1 trillion annually by 2030, representing roughly 40% compound growth. That figure includes both GPUs and CPUs, reflecting the company’s strategy to capture value across the full AI infrastructure stack. AMD reported about $5 billion in AI-related sales in fiscal 2024, meaning the opportunity ahead is vast if the company delivers.
For investors, Tuesday’s event painted a clear picture: AMD is betting its future on AI — and believes it has the technology, partnerships, and momentum to compete. The market’s reaction suggests excitement tempered by realism, but Su’s confident tone left little doubt about AMD’s ambition to stand shoulder-to-shoulder with its larger rival as the AI boom continues.
Is AMD a Buy Now?
When evaluating whether AMD is a good buy today, it’s useful to look at both the fundamental picture and the technical setup.
Fundamental View
On the plus side:
- AMD is riding a strong secular trend in data‑centre chips and AI infrastructure. Revenue growth of ~30%-36% year‑on‑year has been reported in recent quarters.
- The balance sheet is healthy: reasonably low debt, and a business model that has increasingly positive free cash flow and operating leverage.
- AMD’s growth targets are bold but clear (e.g., ~35% annual revenue growth and double-digit data-center market share over 3–5 years).
On the caution side:
- Valuation appears elevated. Forward P/E is over 40 and PEG ratios above 1.6, suggesting expectations are high.
- Execution risks exist: delivering large AI deals, scaling production, and competing with Nvidia all need to go smoothly.
- With much of the positive news already public, some upside may already be priced in.
Technical View
- AMD’s 50‑day and 200‑day moving averages act as solid support, signaling the uptrend remains intact.
- Momentum indicators (e.g., RSI) suggest the stock is not yet overheated, leaving room for some upside, though short-term pullbacks are possible.
- Key support levels should be monitored: a breach could trigger downside acceleration.
BestStock AI’s Insight
Combining fundamentals and technicals, AMD is best classified as a “cautious participate”.
- Investors with high conviction in AI infrastructure and AMD’s execution can consider entry, ideally on pullbacks.
- More valuation-sensitive investors may prefer to wait for a correction or further confirmation of performance.
- Risk management remains essential: set clear exit levels and account for the growth-dependent nature of the stock.
In short: AMD shows strong growth potential and market positioning, but the price paid matters. The margin for error is smaller due to elevated expectations, making timing and risk control key factors for potential buyers.