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 $3.24 billion, up 14.3% year over year and accounted for 42.2% of second-quarter 2025 total revenues. AMD is benefiting from strong demand for EPYC processors that power cloud and enterprise workloads. Emerging AI use cases and rapid adoption of agentic AI are generating demand for general-purpose compute infrastructure, benefiting EPYC demand. 

Adoption of EPYC by the largest cloud hyperscalers is increasing significantly. In the second quarter of 2025, more than 100 new AMD-powered cloud instances were launched, including multiple Turin instances from Google and Oracle Cloud. AMD stated that there are currently 1,200 EPYC cloud instances available globally, and this expansion is driving enterprise adoption of EPYC in cloud. AMD won customers across aerospace, streaming, financial services, retail and energy domains in the reported quarter. Telecom is becoming a stronghold for AMD, with KDDI announcing plans to deploy EPYC processors to power its 5G virtualized network and Nokia selecting EPYC for its cloud platform.

HPE, Dell Technologies, Lenovo and Super Micro launched 28 new Turin platforms in the reported quarter. In enterprise, EPYC is gaining traction with an expanding clientele in technology, automotive, manufacturing, financial services and public sector domains. The launch of the EPYC 4005 series is expected to boost AMD’s footprint among small and medium businesses as well as hosted IT service customers.

Although Data Center AI revenues declined due to U.S. export restrictions, the launch of the Instinct MI350 series that supports deployments powered by AMD CPUs, GPUs and NICs, has strengthened AMD’s system-level capabilities. MI300 and MI325 gained adoption in the reported quarter, as seven of the top 10 model builders and AI companies are currently using Instinct. AMD stated that its MI355 matches or exceeds NVIDIA’s NVDA B200 in critical training and inference workloads. MI355 delivers comparable performance to GB200 for key workloads at lower cost and complexity.

AMD expects Data Center revenues to grow double-digit both on a year-over-year and sequential basis in the third quarter of 2025, driven by a strong portfolio. AMD’s Data Center revenues are expected to further benefit from the planned launch of the MI400 series in 2026. Our model pegs 2025 Data Center revenues to $ 14.47 billion, suggesting growth of 15% from 2024’s reported figure.

Tough Competition Hurts AMD’s Data Center Prospects

NVIDIA 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 second quarter of fiscal 2026, the Data Center segment generated $41.1 billion in revenues, representing 87.9% of total sales. This marked a staggering 56% year-over-year increase and 5% sequential growth.

Broadcom is benefiting from strong demand for its networking products and custom AI accelerators (XPUs). Per the company, each of AVGO’s three hyperscalers plans to deploy 1 million XPU clusters across a single fabric by 2027. Broadcom expects a significant percentage of these deployments to be custom XPUs. The company expects accelerated demand for XPUs in the back half of 2026 as hyperscalers focuses more inference along with frontier model training.

AMD’s Share Price Performance, Valuation & Estimates

AMD shares have jumped 34.4% year to date, outperforming the broader Zacks Computer and Technology sector’s return of 12.9% and the Zacks Computer-Integrated Systems industry’s appreciation of 25.4%.

AMD Stock’s Performance

AMD stock is overvalued, with a forward 12-month price/sales of 7.15X compared with the broader sector’s 6.62X. AMD has a Value Score of F.

AMD Valuation

The Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at $1.17 per share, up 5.4% over the past 30 days, suggesting 18.7% 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.

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This article originally published on Zacks Investment Research (zacks.com).

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