Prediction: This AI Hardware Stock Could Become One of the Next $1 Trillion Companies

The trillion-dollar stock club is a fairly exclusive group. There have only been 10 U.S.-listed stocks that have breached this valuation level, and there are a few more within striking distance.

However, one stock that's a bit far away is Advanced Micro Devices (NASDAQ: AMD). AMD has a market cap of $330 billion, so it may not be on investors' radar for crossing into the $1 trillion valuation range. However, AMD's hardware is starting to become more popular in the artificial intelligence (AI) world, and it may get there faster than many think.

How quickly can AMD reach $1 trillion? Well, if its projections come true, it could be there in as little as four years.

Image source: Getty Images.

AMD is getting a second shot at Nvidia

Nvidia (NASDAQ: NVDA) is the undisputed king of graphics processing units (GPUs). GPUs are well-suited for AI workloads, as they can process multiple calculations in parallel. At the start of the AI boom in 2023, Nvidia's GPUs, the controlling software, and other hardware that supports them were far superior to AMD's. As a result, Nvidia's products became the go-to option, while AMD's only became an alternative.

However, those trends are shifting. AMD has made massive improvements in its control software, ROCm. It noted a 10 times increase in downloads year over year in November 2025. That's a big deal because it shows that developers are exploring their hardware. This could be a signal that AMD's products are starting to become a viable alternative, and may be ready to steal some market share away from Nvidia.

There is only so much money available to build data centers. Computing hardware can be nearly half of the cost to build them, and while Nvidia's products are the best, they aren't cheap.

There aren't readily available prices on flagship GPUs for data centers, and these numbers are estimates from reports. Nvidia's Blackwell B200 GPU can cost between $30,000 and $50,000 per chip, depending on options. Its AMD rival, the MI350, costs $25,000. This allows AI hyperscalers to get more bang for the buck for cloud GPUs, but it remains to be seen if this cheaper price tag is worth it from a performance side.

However, AI hyperscalers may not have a choice on whether they want to use AMD's chips anymore. During Nvidia's Q3 results, the company announced that it was "sold out" of cloud GPUs. While this may sound like a good problem to have, the bigger issue is that customers may turn to AMD's products as an alternative if they cannot get the computing power that they need from Nvidia. If AMD's products can deliver similar results at a lower price tag, this could create a scenario where more clients choose AMD's hardware in the future.

The ball is back in AMD's court for getting a second shot at securing a dominant position in the AI revolution. And management believes they can secure massive growth.

AMD's long-term projections are impressive

AMD unveiled its five-year outlook for the company, and the expectations are high. Management believes the data center division could grow revenue at a 60% compound annual growth rate (CAGR). That's impressive, and far higher than what it has put up in the past.

However, AMD isn't all about data center GPUs. It has a large client and gaming segment as well as an embedded processor division. Both of these sements are expected to grow at a 10% CAGR over the next five years, which brings AMD"s expected CAGR over the next five years to 35%. But that's more than enough to propel AMD into the trillion-dollar club.

Should AMD's growth be steady at 35% over the next few years, it would take a little under four years to reach this goal. But that's just considering revenue growth. If AMD's margins improve over the next few years, it could reach the trillion-dollar market cap even sooner. I think AMD is a sure bet to reach the trillion-dollar club in under five years because that would represent the stock tripling in three years, which makes it a great stock to scoop up today.

Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.