This year, Advanced Micro Devices is experiencing significant growth and could be on the brink of even more advancements.
As one of the top global semiconductor suppliers, AMD’s chips power major devices, including Sony‘s PlayStation 5, Microsoft‘s Xbox, and even Tesla‘s electric cars.
Nonetheless, AMD’s prime opportunity lies in the data center market. The company aims to introduce a new series of graphics processing units (GPUs) designed for AI applications by 2026. In contrast, Nvidia remains a strong competitor.
AMD stocks surged by 34% in 2025, but they’re still below the historical high of $200 reached last year. Some may wonder if it’s a good time for investors to jump in while prices are still low.
AMD is making strides in the data center arena
AMD rolled out its flagship MI300X data center GPU at the end of 2023, trailing behind Nvidia’s top-tier H100 GPU by over a year. Despite this delay, AMD has successfully captured significant clients from Nvidia, such as Microsoft, Oracle, and Meta Platform.
Nvidia continues to innovate with new architectures, like the Blackwell series, yet AMD is narrowing the gap. The introduction of the Mi350 series GPU, based on its new Compute DNA (cDNA) architecture, promises to deliver 35 times the performance of its predecessor. These chips stand shoulder to shoulder with Nvidia’s offerings.
The latest MI355, for example, offers performance levels that rival Nvidia’s Blackwell GB200 GPUs, providing a noteworthy cost-efficiency for AI inference tasks. Essentially, running these AMD chips can be more affordable in the long run without compromising on power, which is appealing to AI startups—think Hyperscaler and OpenAI.
Looking ahead, AMD’s customers are already anticipating the MI400 series, set to debut in 2026. These upcoming chips will pair with specialized software to create a comprehensive AI data center solution known as Helios. CEO Lisa Su has mentioned that these systems will outperform the MI350 series by tenfold.
In straightforward terms, 2026 might be the year AMD surpasses Nvidia in AI data center capabilities.
AMD’s AI data center revenue faces challenges in Q2
In the second quarter of 2025, AMD achieved an impressive $7.7 billion in total revenue, marking a 32% increase from the previous year. The data center sector contributed $3.2 billion to this total, but it fell short of expectations given the competitive GPU landscape.
The US government recently imposed export restrictions that have impacted AMD’s AI GPU sales to China, significantly affecting its data center figures. However, AMD is working on obtaining a license necessary to resume these sales, which is currently under review.
On a brighter note, other segments of AMD’s operations performed well. The client segment saw a remarkable 67% year-over-year revenue increase to $2.5 billion. This success can be attributed to the rising demand for Ryzen AI chips, which combine GPUs, CPUs, and NPUs, and are being adopted by major brands like Dell, Acer, and Asus.
Moreover, AMD’s gaming division also rebounded in Q2, with revenues soaring 73% to $1.1 billion, as console manufacturers stock up for the holiday season. AMD has noted a high demand for its new Radeon 9000 series desktop GPUs, which has surpassed supply.
Is now a good time to buy AMD stocks under $200?
Despite some regulatory challenges affecting the data center division, Lisa Su remains confident about the future. She anticipates that the company’s AI revenue could expand significantly, driven by the MI400 GPU.
So, is AMD still trading below its peak? The company reported $3.45 in adjusted earnings per share (EPS) over the last four quarters, translating to a price-to-earnings (P/E) ratio of 46.8. In contrast, Nvidia’s P/E ratio stands at 55.7, making AMD relatively cheaper.
Wall Street estimates indicate that AMD could achieve an EPS of $5.97 by 2026, positioning its stock at a forward P/E ratio of just 27.1. To maintain its current P/E ratio, AMD’s stock would need to rise by 73% over the coming 18 months.
If the MI400 series proves to be groundbreaking, as anticipated, AMD’s prospects could become even brighter, potentially enhancing its already diversified portfolio.
