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AI computing power is projected to increase 100-fold in the next five years.
AMD is launching a new product to capture demand for more powerful computing systems.
Analysts expect AMD's annual revenue to nearly double by 2027.
Shares of Advanced Micro Devices (NASDAQ: AMD) have doubled over the past year. The stock trades at a high price-to-earnings multiple, but this premium might be justified based on the trajectory of infrastructure spending for artificial intelligence (AI).
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At CES 2026, AMD CEO Lisa Su put a number on how fast AI compute is growing. Since 2022, AI computing power has climbed from 1 zettaflop to more than 100 zettaflops, driven by AI training and inferencing in data centers. But over the next five years, Su believes AI compute will need to increase another 100-fold to run more advanced AI applications.
AI has barely begun to impact people's lives in healthcare, autonomous transportation, and humanoid robots. It will require a substantial increase in computing power for AI to reach its full potential, and the good news for investors is that it's not just a one-chip upgrade cycle.
AMD is offering new products for this opportunity. Its upcoming Helios rack system will feature 72 graphics processing units (GPUs) that can operate like a single computing unit. Helios will feature the company's EPYC central processing units (CPUs) and networking components. Combining multiple products into a single system should benefit AMD's margins.
AMD faces competition from larger chip companies, but if AI needs to expand as much as Su expects, data center operators may prefer to work with AMD to lower costs and reduce dependence on a single supplier.
The company's shift to offering rack-scale systems for data centers makes the stock a compelling buy. Wall Street analysts expect the company's revenue to increase from $25 billion in 2024 to $62 billion by 2027, which should translate into earnings growth and attractive returns for investors.
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John Ballard has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices. The Motley Fool has a disclosure policy.
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