AI Skeptics Could Be Wrong, and This Stock Still Has Room to Run

Advanced Micro Devices (NASDAQ: AMD) was once known as "that company that makes gaming chips", but today, it's far from the truth. The company designs the processors and graphics engines that drive laptops, gaming consoles, data centers, and even artificial intelligence systems. Basically, if it computes, renders, or learns, then there is a decent chance that somewhere inside it is AMD silicon.

Based in California, AMD is now one of the three pillars of the chip industry alongside Intel and Nvidia.

Image source: Getty Images.

How AMD keeps the lights on

AMD released its third-quarter financials on Nov. 4, 2025, and reported revenue was up 36% year over year to $9.25 billion. Meanwhile, net income was up 61% to $1.24 billion.

Breaking it down, AMD's data center segment for the quarter pulled in $4.3 billion in revenue, up 22% from last year, thanks to the strong demand for its 5th-generation EPYC processors and Instinct MI350 GPUs.

However, the real standout is AMD's Client and Gaming segment, which generated $4 billion for the quarter, representing a massive 73% increase. Client revenue hit a record $2.8 billion, driven by strong Ryzen processor sales and a higher-end product mix, while gaming revenue surged 181% to $1.3 billion as demand for Radeon GPUs and semi-custom chips took off.

On the other hand, the Embedded segment is down 8% from last year at $857 million.

AMD stock profile

As of Nov. 12, 2025, AMD trades around $256 per share and is up approximately 112% year to date after hitting an all-time high of $267 on Oct. 29, 2025.

Currently, AMD trades at nearly 79 times its earnings, reflecting the market's confidence in the company's future growth potential. Indeed, some recent news and updates could well justify AMD's current valuation.

The OpenAI partnership

First, in terms of GPU market share, AMD has always trailed Nvidia. And recently, competition got tougher for AMD as a result of the recent collaboration between Nvidia and Intel.

However, AMD also scored a major win with the announcement of its partnership with OpenAI. And this time it's worth noting that OpenAI chose to partner with AMD, not Nvidia. Under this agreement, OpenAI will utilize up to 6 gigawatts of AMD GPUs to expand its AI infrastructure. This marks one of the largest compute commitments in AI history, as that much power could easily supply roughly 5 million US homes.

AMD has also granted OpenAI a warrant for up to 160 million shares, which is equivalent to roughly 10% of the company, based upon the achievement of specified milestones within the partnership.

AMD's partnership with the US Department of Energy

Under this agreement with the U.S. Department of Energy, AMD will power two next-generation supercomputers at Oak Ridge National Laboratory: Lux AI and Discovery.

Lux AI is set to launch in early 2026 and is poised to become the United States' first AI factory built specifically for scientific research. It will run on AMD Instinct GPUs, EPYC CPUs, and Pensando networking technology, all working together to handle massive data workloads.

Then, in 2028, Discovery will launch as the next major supercomputer at Oak Ridge National Laboratory, built on AMD's next-generation architecture using EPYC "Venice" processors and Instinct MI430X GPUs.

Both supercomputers represent a $1 billion public and private investment project, with AMD technology at the center.

Investment Outlook

Currently, Wall Street rates AMD stock with a consensus "Moderate Buy" rating. AMD isn't trying to mimic either Nvidia's or Intel's playbooks; they are writing their own-built on high-performance design and partnerships that span AI, supercomputing, and beyond. With strong financial growth, a landmark partnership with OpenAI, and a deal powering the U.S. Department of Energy's upcoming AI supercomputers, AMD is cementing its place as one of the key players shaping the future of advanced computing.

Rick Orford has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.