Where Will Advanced Micro Devices Stock Be in 2 Years?
Key Points
AMD's growth is heating up, driven by increasing demand from AI data centers, servers, and PCs.
AMD secured a major deal with OpenAI to supply Instinct MI450 chips, solidifying its position as a major supplier in the AI chip market.
Following the OpenAI deal, analysts forecast significantly higher earnings over the next two years.
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Advanced Micro Devices (NASDAQ: AMD) is meeting the insatiable demand for advanced chips needed for artificial intelligence (AI). After signing a major deal with OpenAI, the stock has surged 100% year to date. Investors might be hesitant to buy a stock after a sharp rally, but the company's momentum and valuation leave room for more upside in 2026.
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Why AMD stock can climb higher
On its third-quarter earnings call, AMD reported a 36% year-over-year increase in revenue, driven by AI data centers, servers, and PC demand.
The recent deal with OpenAI is a major growth catalyst for AMD. The deal calls for AMD to supply 1 gigawatt worth of its new Instinct MI450 chips starting next year and expanding up to 6 gigawatts over the long term. Other major tech companies like Microsoft and Google are also increasingly using AMD's chips, further validating AMD's competitive position.
Wall Street analysts anticipate AMD's earnings per share growing to $9.62 by 2027. If the stock continues to trade at the same forward price-to-earnings multiple of 61, the stock could be worth $586 in two years. A lower multiple of 35, would still put the share price at $336.
Based on its momentum, AMD remains a compelling stock to consider to profit off the growing demand for AI chips.
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John Ballard has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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