Morningstar

AMD Earnings: Strong Data Center Outlook Points to Upside for Stock

We raise our fair value estimate for AMD stock.

The AMD Logo photographed off the screen of an iphone.
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Securities in This Article
Advanced Micro Devices Inc
(AMD)

Key Morningstar Metrics for Advanced Micro Devices

  • Fair Value Estimate
    : $570
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : Narrow
  • Morningstar Uncertainty Rating
    : Very High

What We Thought of Advanced Micro Devices’ Earnings

AMD AMD reported third-quarter revenue of $13.4 billion, up 45% year over year and ahead of guidance of $13.0 billion. AMD expects fourth-quarter revenue of $17.0 billion, up 66% year over year and ahead of FactSet consensus estimates of $16.3 billion.

Why it matters: AMD anticipates strong data center revenue in both server CPUs used in agentic artificial intelligence and its AI accelerator, or GPU, business as its new AI racks (Helios) roll out to leading AI developers like OpenAI, Meta, Anthropic, and others. Data center strength will offset softening PC demand.

  • We’re more impressed with AMD’s commentary for 2027, as server CPU revenue should grow 100%-plus, above prior expectations of 70%-plus. GPU revenue should “significantly more than double” in 2027, driving total revenue growth of 80%-plus for the full year.
  • In the fourth quarter, AMD expects 50%-plus sequential data center revenue growth and suggests that GPU revenue will exceed server CPU revenue for the first time. This GPU revenue, which we estimate at $7.5 billion, likely sets the floor for AMD’s GPU revenue in the quarters ahead.

The bottom line: We raise our fair value estimate for narrow-moat AMD to $570 from $530, based on higher server CPU and GPU revenue forecasts, partially offset by lower client PC CPU revenue, consistent with the gloomy comments about the PC market made by rival Intel last week.

  • Shares rose as much as 11% after hours to the $530 range, though this is still below the $570 range where AMD shares traded before Intel’s rough earnings report on Oct. 29.
  • AMD has less PC exposure than Intel and believes it has more content in premium PCs that may be less price-sensitive to the high memory costs plaguing demand. Still, AMD also expects PC unit sales to be down double digits in 2027 and is unlikely to grow revenue next year.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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