Advanced Micro Devices Stock Gains 11% YTD: Time to Hold or Exit?

Advanced Micro Devices AMD shares have rallied 11.4% in the year-to-date period, outperforming the Zacks Computer and Technology sector’s increase of 7.9%. 

The company’s shares have also outperformed its peer, Intel Corporation INTC, which is also expanding its footprint in the data center and client segments. Intel’s shares have gained 9.5% in the year-to-date period.

AMD YTD Performance

Despite Intel’s efforts, AMD’s innovation has given it an edge over INTC.  Advanced Micro Devices is benefiting from its expanding portfolio, accretive acquisitions and rich partner base. Its robust Data Center and Client revenues have been a major growth driver for its success.

So, how should you play the AMD stock now? Let’s dig deep to find out.

AMD Benefits From Expanding EPYC Portfolio

AMD’s expanding portfolio has been noteworthy. It is benefiting from its strong presence in the data center market, which is driven by the widespread adoption of its EPYC processors. In the first quarter of 2025, data center revenues surged 57.2% year over year to $3.674 billion, accounting for 49.4% of total revenues.

Building on this momentum, in June 2025, the company announced that Nokia NOK had adopted its fifth-gen EPYC 9005 Series processors for the Nokia Cloud Platform.   

These processors will enhance performance per watt for containerized workloads, which is important to 5G Core, edge, and enterprise applications. The integration of AMD EPYC 9005 Series processors into Nokia Cloud Platform supports telecom networks in meeting rising data demands while improving energy efficiency and reducing environmental impact.

AMD Expands AI Reach With New MI350 GPUs and Key Partners

AMD is strengthening its footprint in the artificial intelligence (AI) market through an expanding portfolio. AMD recently introduced its comprehensive, end-to-end AI platform at the 2025 Advancing AI event, introducing the powerful Instinct MI350 Series GPUs with 4x generational AI compute gains. 

The company also showcased its open, rack-scale AI infrastructure and ROCm 7 software stack, enabling scalable, energy-efficient AI deployment. Strategic partners, including Meta Platforms, OpenAI, Microsoft, and Oracle, highlighted AMD’s growing role in powering next-generation AI workloads.

Meta Platforms announced the broad deployment of AMD Instinct MI300X for Llama 3 and Llama 4 inference. Meta Platforms also expressed strong interest in the MI350 Series and is collaborating with AMD on future AI roadmaps, including the MI400 platform.

AMD Faces Stiff Competition From NVIDIA

Despite an expanding portfolio and a rich partner base, AMD is facing stiff competition from NVIDIA NVDA in the data center market.

NVIDIA is benefiting from the strong growth of artificial intelligence (AI) and high-performance, accelerated computing. The growing demand for generative AI and large language models, which utilize GPUs based on NVIDIA’s Hopper and Blackwell architectures, is driving its data center revenues. In the first quarter of fiscal 2026, Data Center revenues jumped 73.3% year over year and 9.9% from the previous quarter to $39.1 billion.

AMD’s Q2 Guidance Unimpressive

Despite an expanding portfolio and a rich partner base, AMD is expected to be hurt by export restrictions on GPUs to China, which will be a headwind and stiff competition from NVIDIA.

AMD expects second-quarter 2025 revenues of $7.4 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 27%. AMD expects a reduction of approximately $700 million in second-quarter 2025 revenues due to the halt of MI308X shipments to China.

AMD’s Earnings Estimates Trend Downward

The Zacks Consensus Estimate for AMD’s second-quarter 2025 earnings is currently pegged at 54 cents per share, which has declined by a couple of pennies over the past 30 days, indicating a year-over-year decline of 21.74%.

The consensus mark for second-quarter 2025 revenues is pegged at $7.41 billion, indicating year-over-year growth of 26.96%.

Advanced Micro Devices, Inc. Price and Consensus

Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote

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 6.33X compared with the Computer - Integrated Systems industry’s 3.83X.

Price/Sales (F12M)

Conclusion: Hold AMD Stock for Now

AMD’s expanding portfolio, strategic acquisitions 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. The growing demand for custom AI chips, offered by companies like Broadcom, is increasing concerns over market share. Stretched valuation also remains 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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