AMD Rides on Accelerating Data Center Growth: A Sign of More Upside?

Advanced Micro Devices AMD is riding on strong Data Center revenues, which reached $4.34 billion, up 22.3% year over year and accounting for 47% of third-quarter 2025 total revenues. Sequentially, revenues climbed 34%. The top-line benefited from strong demand for fifth-gen EPYC processors and Instinct MI350 series GPUs. Hyperscalers launched more than 160 EPYC-powered instances in the reported quarter, including new Turin offerings from Google, Microsoft Azure, Alibaba and others. More than 1,350 public EPYC cloud instances are now available globally, up roughly 50% year over year.A rich partner base that includes the likes of OpenAI, HPE, Dell Technologies, Lenovo, Super Micro, Amazon AMZN cloud arm Amazon Web Services (AWS), Oracle, Cisco Systems, IBM, Cohere, Vultr, DigitalOcean and others is driving AMD’s prospects. AMD introduced its Helios design supporting Meta Platforms’ new Open Rack Wide specification. AWS launched Amazon EC2 M8a instances using 5th Gen EPYC CPUs, boosting performance up to 30% compared with the previous generation.AMD now expects the data center total addressable market to hit $1 trillion by 2030, suggesting a CAGR of more than 40% from roughly $200 billion estimated in 2025. AMD expects its data center AI revenues to see a CAGR of more than 80% over the next 3-5 years, driven by strong demand for instinct GPUs (MI450 Series and Helios rack-scale solutions) and expanding clientele that includes multiple hyperscalers as well as sovereign opportunities. Overall data center business revenues and total revenues are expected to see a CAGR of more than 60% and greater than 35%, respectively, over the same time frame.AMD expects Data Center revenues to grow double-digit both on a year-over-year and sequential basis in the fourth quarter of 2025, driven by a strong portfolio. AMD expects fourth-quarter 2025 revenues of $9.6 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 25% and sequential growth of approximately 4%. The Zacks Consensus Estimate for revenues is currently pegged at $9.65 billion, indicating 25.97% growth from the figure reported in the year-ago quarter.Tough Competition Hurts AMD’s Data Center ProspectsNVIDIA NVDA and Broadcom AVGO are major competitors in the Data Center space. NVIDIA is at the center of AI computing, with its products widely used across data centers, gaming and autonomous vehicles. The company’s newer Hopper 200 and Blackwell GPU platforms are being adopted quickly as customers work to grow their AI infrastructure. In the third quarter of fiscal 2026, the Data Center segment generated $51.22 billion in revenues, representing 89.8% of total sales. This marked a staggering 66% year-over-year increase and 25% sequential growth. Broadcom is benefiting from strong demand for its networking products and custom AI accelerators (XPUs). XPUs accounted for 65% of AI revenues in the third quarter of fiscal 2025. Consolidated backlog hit $110 billion, and the company has secured more than $10 billion of orders for AI racks based on XPU demand. AVGO’s networking portfolio is gaining from strong demand for Tomahawk 5 and 6 products, as well as the Jericho 4 Ethernet fabric router.AMD’s Share Price Performance, Valuation & EstimatesAMD shares have jumped 49.9% on a trailing 12-month basis, outperforming the broader Zacks Computer and Technology sector’s return of 25.7%.AMD Stock’s Performance Image Source: Zacks Investment Research AMD stock is overvalued, with a forward 12-month price/sales of 8.04X compared with the broader sector’s 6.61X. AMD has a Value Score of F.AMD Valuation Image Source: Zacks Investment Research The Zacks Consensus Estimate for fourth-quarter 2025 earnings is pegged at $1.31 per share, down by a penny over the past 30 days, suggesting 20.18% year-over-year growth.  Advanced Micro Devices, Inc. Price and Consensus Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote AMD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks