AMD Shares Ride on Strong EPYC Demand: Buy, Sell or Hold the Stock?

Advanced Micro Devices AMD shares have jumped 34% year to date (YTD), outperforming the Zacks Computer and Technology sector and its closest peers, NVIDIA NVDA and Intel INTC. The broader sector has appreciated 14% while shares of NVIDIA and Intel have returned 27.8% and 22.7%, respectively, YTD. 

The outperformance can be attributed to 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. 

Will continued demand for EPYC push AMD shares higher in the rest of 2025, and is it enough for investors to jump into the stock? Let’s find out.

AMD Stock’s YTD Performance

EPYC and Instinct Adoption Bode Well for AMD’s Prospects

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 ORCL. 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 second quarter of 2025. 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.

Apart from EPYC, AMD’s prospects are driven by strong demand for Instinct accelerators. 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. Oracle is building a 27,000-plus node AI cluster combining MI355X accelerators, fifth-gen EPYC Turin CPUs and Pollara 400 SmartNICs.

AMD stated that its MI355 matches or exceeds NVIDIA’s B200 in critical training and inference workloads. MI355 delivers comparable performance to GB200 for key workloads at lower cost and complexity. AMD remains on track in the development of the next-generation MI400 series and is expected to launch in 2026.

AMD Offers Positive Q3 Guidance

AMD’s second-quarter 2025 results suffered from the U.S. export controls on MI308 sales to China, leading to an $800 million inventory write-down. Data Center AI revenues fell year over year due to the restrictions. AMD’s third-quarter 2025 guidance doesn’t include any revenues from MI308.

AMD now expects revenues to be roughly $8.7 billion (+/- $300 million), indicating 28% year-over-year revenue growth at the mid-point, driven by strong double-digit growth in Client and Gaming, and Data Center segments. 

Sequentially, revenues are expected to grow approximately 13%, driven by strong double-digit growth in the Data Center segment with the ramp of AMD Instinct MI350 series GPU products. AMD expects modest growth in the Client and Gaming segments, with Client revenues increasing and flat Gaming revenues. AMD expects the Embedded segment’s revenues to return to growth in the current quarter.

The Zacks Consensus Estimate for third-quarter 2025 revenues is pegged at $8.72 billion, indicating 27.9% from the figure reported in the year-ago quarter. The consensus mark for third-quarter 2025 earnings is pegged $1.18 per share, up 6% over the past 30 days, suggesting 28.3% from the figure reported in the year-ago quarter.

AMD Faces Stiff Competition From NVIDIA

Despite an expanding portfolio and a rich partner base, AMD is facing stiff competition from NVIDIA.

NVIDIA is benefiting from the strong growth of AI and high-performance, accelerated computing. The company’s newer Hopper 200 and Blackwell GPU platforms are being rapidly adopted 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.

AMD Stock Overvalued

AMD stock is currently overvalued, as the Value Score of F suggests a stretched valuation at this moment.

The stock is trading at a premium, with a forward 12-month price/sales of 7.1X compared with the industry’s 3.46X and Intel's 2.01X.

AMD Valuation

Conclusion

AMD’s expanding portfolio and rich partner base are expected to improve its top-line growth. 

However, its near-term prospects are dull due to macroeconomic uncertainties and stiff competition, particularly from NVIDIA in the cloud data center and AI chip markets. Stretched valuation is a concern. 

AMD currently has a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point to accumulate the stock. 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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