|
|
|
|
|||||
|
|
|
AMD stock has to double less than twice to reach $1 trillion.
Its growing success with AI accelerators could make it a stronger competitor in that market.
Advanced Micro Devices (NASDAQ: AMD) has evolved into a semiconductor powerhouse in recent years. Under the leadership of Lisa Su, it overtook longtime rival Intel in the PC market. Although Nvidia's success with the artificial intelligence (AI) accelerator market initially took AMD by surprise, AMD's efforts to catch up have made it an increasingly important company in that market.
Such innovations have also made AMD a prime candidate to join the 10 companies that now have a market cap above $1 trillion. Here's how it can reach that milestone, and why the path might be easier to achieve than many investors might assume.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Image source: Advanced Micro Devices.
At first glance, AMD might appear far away from that milestone since its $280 billion market cap means it is only 28% of the way toward that goal.
However, that is not as far away from $1 trillion as it might appear. At the current market cap, it has to double in value less than two times to reach that point.
Moreover, a simple increase in popularity could get AMD to that point. Although its 99 price-to-earnings (P/E) ratio might make it appear pricey, it currently sells at a forward P/E ratio of 44. Thus, if it achieves some of the popularity that has boosted Palantir, a stock that sells at 623 times its earnings, multiple expansion alone could take it there.
More importantly, AMD is in a strong position to reach a $1 trillion market cap even if such hype does not materialize. The company's data center segment, which designs AI accelerators, generated just over $6.9 billion in revenue in the first half of 2025, around 46% of AMD's total. In comparison, Nvidia's data center segment made up 89% of the company's revenue in its most recent quarter.
Admittedly, AMD is significantly behind Nvidia in the AI accelerator market, and while AMD's MI350 chip has generated some interest due to its lower cost, it is hardly a threat to Nvidia's dominance.
However, AMD plans to release the MI400 next year. With its integration with AMD's upcoming Helios rack-scale solution, some analysts believe it can become a competitive threat to Nvidia's upcoming Vera Rubin platform. Nvidia's CUDA software, which has previously cemented its dominance, also faces increased competitive threats. Such conditions could mean AMD is on the way to becoming a full-fledged competitor in the AI market.
Additionally, Grand View Research forecasts a compound annual growth rate (CAGR) of 29% through 2030, taking the market's size to an estimated $323 billion. If that prediction comes to pass, AMD will almost certainly benefit from that industry growth.
Even if data center revenue becomes AMD's dominant revenue source, investors should not forget about the client, embedded, and gaming segments. Fortune Business Insights forecasts a CAGR of 15% for the semiconductor industry through 2032. That seems to affirm Grand View's findings, and the market rising above $2 trillion presents AMD with a massive tailwind.
Finally, as conditions stand now, Nvidia has reached a market cap of just under $4.5 trillion, making AMD approximately 6% of its size. Hence, even if AMD grew to slightly less than one-fourth of Nvidia's size, its market cap would presumably reach $1 trillion or higher.
Ultimately, AMD is on track to benefit from numerous catalysts that will likely take its market cap to $1 trillion and beyond.
The company is less than two doubles away from reaching $1 trillion, meaning hype alone could take it to that milestone. Still, the growth of the semiconductor industry in general puts it on track to spark massive growth.
Additionally, even though all four of AMD's segments will probably contribute to the company's growth, the path to $1 trillion will most likely hinge on the AI accelerator market, particularly with the upcoming release of the MI400. Even if it falls somewhat short of expectations, investors should remember that AMD can reach $1 trillion even if it grows to less than one-fourth of Nvidia's size. Such conditions make reaching a $1 trillion market cap easier than most investors are likely assuming.
Before you buy stock in Advanced Micro Devices, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $660,783!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,122,682!*
Now, it’s worth noting Stock Advisor’s total average return is 1,069% — a market-crushing outperformance compared to 184% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of August 13, 2025
Will Healy has positions in Advanced Micro Devices and Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Nvidia, and Palantir Technologies. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.
| 1 hour | |
| 1 hour | |
| 2 hours | |
| 2 hours | |
| 3 hours | |
| 3 hours | |
| 4 hours | |
| 4 hours | |
| 5 hours | |
| 5 hours | |
| 5 hours | |
| 5 hours | |
| 6 hours | |
| 7 hours | |
| Aug-13 |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, backtesting, and much more.
Learn more about FINVIZ*Elite