AMD Shares Ride on Strong EPYC Demand: Buy, Sell or Hold the Stock?

Core Insights - Advanced Micro Devices (AMD) shares have increased by 34% year to date (YTD), outperforming the broader Computer and Technology sector, which has appreciated by 14%, and its closest peers, NVIDIA and Intel, which have returned 27.8% and 22.7% respectively [1][6]. Demand and Adoption - The strong demand for EPYC processors, driven by cloud and enterprise workloads, is a key factor in AMD's performance. The rise of AI use cases and the adoption of agentic AI are further boosting the demand for general-purpose compute infrastructure, benefiting EPYC sales [2][5]. - Adoption of EPYC by major cloud hyperscalers is significantly increasing, with over 100 new AMD-powered cloud instances launched in Q2 2025. Currently, there are 1,200 EPYC cloud instances available globally, which is driving enterprise adoption across various sectors including aerospace, streaming, financial services, retail, and energy [5][6]. Financial Performance and Guidance - AMD's Q3 2025 revenue guidance anticipates approximately $8.7 billion, indicating a 28% year-over-year growth at the mid-point, supported by strong double-digit growth in Client, Gaming, and Data Center segments [11][12]. - The Zacks Consensus Estimate for Q3 2025 revenues is pegged at $8.72 billion, reflecting a 27.9% increase from the previous year, with earnings expected to be $1.18 per share, up 6% over the past 30 days [13]. Competitive Landscape - Despite AMD's expanding portfolio and strong partnerships, it faces stiff competition from NVIDIA, which is experiencing significant growth in AI and high-performance computing. NVIDIA's Data Center segment generated $41.1 billion in revenues in Q2 2026, marking a 56% year-over-year increase [14][15]. - AMD's stock is currently considered overvalued, with a forward 12-month price/sales ratio of 7.1X compared to the industry's 3.46X and Intel's 2.01X, indicating a stretched valuation [16]. Conclusion - AMD's expanding product offerings and partnerships are expected to enhance its revenue growth, but near-term prospects are clouded by macroeconomic uncertainties and intense competition, particularly from NVIDIA in the cloud data center and AI chip markets [19].