Can Advanced Micro Devices Aid Its Data Center Revenues With GPUs?

Core Insights - Advanced Micro Devices (AMD) is experiencing strong demand for its Graphics Processing Units (GPUs), primarily due to the rising adoption of artificial intelligence (AI) and machine learning techniques [1] - In Q1 2025, AMD's Data Center revenues increased by 57.2% year over year to $3.674 billion, making up 49.4% of total revenues, driven by sales of AMD EPYC CPUs and AMD Instinct GPUs [1][9] - AMD has launched its comprehensive AI platform, including the new Instinct MI350 Series GPUs, which offer 4x generational AI compute gains [2] - AMD has enhanced support for frontier AI models on Instinct GPUs with ROCm software, providing day-zero support for the latest Meta AI Llama 4 and Google Gemma 3 models [3] Competitive Landscape - AMD faces significant competition in the GPU market from NVIDIA and Intel [4] - NVIDIA's Data Center revenues surged by 73.3% year over year to $39.1 billion in Q1 2026, driven by the demand for generative AI and large language models [5] - Intel is expanding its GPU market presence with new Arc Pro B-series GPUs aimed at AI inference and demanding workloads [6] Stock Performance and Valuation - AMD shares have increased by 18.9% year to date, outperforming the broader Zacks Computer & Technology sector's return of 4.4%, but underperforming the Zacks Computer - Integrated Systems industry's increase of 28.1% [7] - AMD is trading at a premium with a forward 12-month Price/Sales ratio of 6.78X compared to the industry's 3.92X, and it has a Value Score of F [10] - The Zacks Consensus Estimate for Q2 2025 earnings is 54 cents per share, indicating an 8.4% decline over the past 30 days and a 21.74% decrease year over year [12]