Advanced Micro Devices AMD shares have jumped 33.4% in the past month, outperforming the Zacks Computer and Technology sector and its closest peers, NVIDIA NVDA and Broadcom AVGO. While shares of NVIDIA have inched up 3.1% Broadcom dropped 10.8%, YTD. The broader sector has declined 0.9%.
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. AMD is benefiting from strong traction in the AI infrastructure market, driven by its advanced product portfolio and strategic investments in AI hardware and software. An expanding partner base, including a recent 6-gigawatt deal with OpenAI, boosts AMD’s prospects.
However, stiff competition from NVIDIA and Broadcom, along with a challenging macroeconomic environment due to tariff-related uncertainties, creates a headwind for AMD.
So, are the aforesaid drivers enough for investors to jump into the AMD stock? Let’s find out.
AMD Stock’s One-Month Performance
Image Source: Zacks Investment Research
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. In June 2025, AMD unveiled its new Instinct MI350 Series GPUs and open rack-scale AI infrastructure, showcasing significant advancements in AI performance and energy efficiency alongside major industry partners.
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 expects third-quarter 2025 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 $8.71 billion, indicating a 27.8% increase from the figure reported in the year-ago quarter. The consensus mark for third-quarter 2025 earnings is pegged $1.16 per share, unchanged over the past 30 days, suggesting 28.3% 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
Meanwhile, the Zacks Consensus Estimate for fourth-quarter 2025 revenues is pegged at $9.08 billion, indicating 18.6% from the figure reported in the year-ago quarter. The consensus mark for fourth-quarter 2025 earnings is pegged $1.31 per share, unchanged over the past 30 days, suggesting 20.2% from the figure reported in the year-ago quarter.
AMD Faces Stiff Competition From NVIDIA and AVGO
Despite an expanding portfolio and a rich partner base, AMD is facing stiff competition from NVIDIA and Broadcom.
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.
Broadcom is benefiting from strong demand for its networking products and custom AI accelerators (XPUs). AVGO expects accelerated demand for XPUs in the back half of 2026 as hyperscalers focus more on inference, along with frontier model training.
AMD Stock Overvalued
AMD stock is currently overvalued, as the Value Score of D suggests a stretched valuation at this moment.
The stock is trading at a premium, with a forward 12-month price/sales of 9.15X compared with the sector’s 6.73X.
AMD Valuation
Image Source: Zacks Investment Research
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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Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).