AMD’s CFO, Jean Hu, Just Announced Fantastic News for Investors

Advanced Micro Devices (NASDAQ:AMD) is firing on all cylinders. The company's shares have soared by 223% over the past 12 months (as of writing) as its financial results have improved significantly. Some investors may believe that the semiconductor specialist cannot sustain this run, but what if it can? Recent comments from AMD's CFO, Jean Hu, suggest that there is still plenty of room for the company to grow.

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Relentless demand for AMD's products

AMD is a major player in the server CPU (Central Processing Unit) market and also offers GPUs (Graphics Processing Unit), which have been the defining hardware of the artificial intelligence revolution so far. AMD's GPU market share is far below Nvidia's (NASDAQ:NVDA), but the point is that the company's data center segment is driving outstanding financial results, helped by demand for its CPUs and AI GPUs. And there is more where that came from.

AMD's CFO, Jean Hu, recently said at a conference that the company's total addressable market (TAM) could reach $2 trillion by 2030. Beyond the fact that this is an enormous number, it's also worth noting that management's guidance has been trending up, so there is a chance this estimate could rise in the coming quarters.

Consider, for instance, that in May, the company projected an addressable opportunity within its server CPU business of $120 billion by 2030, with a CAGR greater than 35% over the next few years -- and that CAGR estimate through 2030 was far higher than what it had communicated to investors some six months prior. AMD recently updated this guidance again and now thinks its server CPU business could hit $220 billion and grow more than 50% annually through the end of the decade.

Even considering that management is hardly an unbiased source, the fact that it continues to update these numbers suggests it is seeing real signals in the industry that are forcing it to do so. Are AMD's TAM projections inflated? Maybe. But we can look elsewhere for confirmation that industry demand remains healthy. Consider the hyperscalers, or major cloud computing providers.

Both Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) have increased their full-year 2026 capex guidance, which was already substantial, over the past few months. Both companies are spending fortunes on AI infrastructure. Microsoft (NASDAQ:MSFT) is increasingly launching AI agents. And as the company's CEO, Satya Nadella, said: "When it comes to running agents, CPUs are just as important as GPUs." That's important given AMD's position in the CPU space.

And as the agentic AI boom takes off, we should expect sustained demand for AMD's products. Importantly, Nadella said that bit about CPUs right after saying that Microsoft will be among the first to deploy AMD's AI computing system, Helios, as well as Nvidia's competing Vera Rubin system. In other words, these companies are putting their money where their mouths are, and they aren't the only ones. This is, indeed, great news for AMD's future.

Is AMD stock still a buy?

In the second quarter, AMD's revenue increased 50% year over year to $11.5 billion, while its adjusted earnings per share came in at $1.66, up 246% from the year-ago period. Provided management's TAM guidance through 2030 is correct and AMD can execute, the stock could continue to post excellent financial results. This helps put the company's valuation in perspective. AMD is trading at 33.4x forward earnings, versus an average of 20.2x for information technology stocks. But AMD is arguably worth the premium, given how fast its earnings are growing.

The company also has a strong position in its core market, a competitive edge due to switching costs and deep, long-standing technological expertise, and recent market share gains against its biggest competitor, Intel (NASDAQ:INTC). Naturally, there are some risks to consider, including the possibility that AMD's TAM doesn't grow as fast as the company expects and intensifying competition in its market. However, my view is that AMD is well-positioned to beat the market over the next few years.

Prosper Junior Bakiny has positions in Alphabet, Amazon, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Intel, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.