Instinct GPUs Anchor AMD-META Deal: What's Ahead for AMD Stock?

Advanced Micro Devices’ AMD data center AI business has been driven by strong demand for Instinct MI350 series and MI300 series GPUs. Prospects are expected to accelerate with the upcoming MI450 series, which forms the crux of the 6-gigawatt (GWs) deal inked between AMD and Meta Platforms (META). The first deployment will see Meta Platforms’ use of custom MI450, along with 6th-generation EPYC CPUs, codenamed “Venice,” running on ROCm software and built on the AMD Helios rack-scale architecture. AMD and Meta are also expanding their CPU partnership, with the latter set be a lead customer for both Venice and “Verano,” a next-generation of EPYC processors.

Helios is gaining traction, as evident from AMD’s deals with OpenAI for deployment of 6-GWs of instinct GPUs, HPE’s plan to offer Helios racks with purpose-built HPE Juniper Ethernet switches and optimized software for high bandwidth scale-up networking, and Lenovo’s announced Helios racks offering. Oracle Cloud Infrastructure (OCI) is set to launch the first publicly available AI supercluster using AMD’s Helios rack design, featuring Instinct MI450 GPUs, EPYC Venice CPUs and Pensando Vulcano networking. 

The launch of the MI500 series, powered by AMD’s CDNA 6 architecture built on advanced 2-nanometer process technology and featuring high-speed HBM4E memory, is expected to drive further growth. AMD currently expects the data center total addressable market to hit $1 trillion by 2030, suggesting a CAGR of more than 40% from roughly $200 billion estimated in 2025. AMD expects its data center AI revenues to see a CAGR of more than 80% over the next 3-5 years. Overall, data center business revenues are expected to see an annual growth rate of more than 60% over the next three to five years. AMD is expected to ride on these factors despite stiff competition from the likes of NVIDIA NVDA and Broadcom AVGO.

Tough Competition Hurts AMD’s AI Prospects

NVIDIA and Broadcom 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. 

Broadcom is benefiting from strong demand for its networking products and custom AI accelerators. Broadcom expects first-quarter fiscal 2026 AI revenues to double to $8.2 billion. AVGO’s networking portfolio is gaining from strong demand for Tomahawk 6 products, as well as the Jericho 4 Ethernet fabric router.

AMD’s Share Price Performance, Valuation & Estimates

AMD shares have jumped 104.2% on a trailing 12-month basis, outperforming the broader Zacks Computer and Technology sector’s return of 24.4%.

AMD Stock’s Performance

AMD stock is overvalued, with a forward 12-month price/sales of 7.33X compared with the broader sector’s 6.38X. AMD has a Value Score of D.

AMD Valuation

The Zacks Consensus Estimate for 2026 earnings is pegged at $6.60 per share, up 3.6% over the past 30 days, suggesting 58.3% growth from the figure reported in the year-ago quarter.
 

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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