Could Advanced Micro Devices Stock Help You Become a Millionaire?

Advanced Micro Devices (NASDAQ: AMD) recently became a $1 trillion company as demand for its graphics processing units (GPUs) and central processing units (CPUs) has intensified. With tech giants scrambling to release artificial intelligence (AI) models, enhance their cloud platforms, and launch other AI-fueled services, demand for powerful processors should continue to surge.

Although some investors who bought into AMD a few years ago and held on have already gotten rich with this stock, it's still possible for this chipmaker to generate market-beating returns.

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Data center revenue continues to impress

Advanced Micro Devices has a client and gaming segment, and chip sales in that part of the business rose by 6% year over year in its fiscal second quarter. It also makes "embedded" chips for specialized industrial uses -- sales in that segment were up by 19%. These business segments aren't the main draws for Advanced Micro Devices investors, but they offer valuable context for long-term growth.

Those segments combined to make up roughly $4.7 billion in sales during the second quarter. But Advanced Micro Devices' data center segment sales grew by 107% year over year to $6.7 billion.

That pace of growth in its largest segment bodes well for AMD's overall revenue growth rates in future quarters. And as data center revenue continues to outpace the rest of the company, it will increasingly dwarf the other segments.

The data center segment was the main factor that drove overall revenue higher by 50% year over year. The large slice of total sales from data center chips implies that elevated revenue growth rates will be the norm for multiple quarters, if not years.

That data center growth also came with rising margins. Net income was up by 163%, a figure that's largely aligned with the stock's year-to-date gains of about 179%.

Chips and racks are still in high demand

Advanced Micro Devices should continue to rally as long as hyperscalers continue to buy all the AI processors that the chip sector can produce, and the company's backlog indicates that the orders are ramping up. It has said it would start shipping its new Helios rack-scale platforms around the end of its fiscal third quarter, with OpenAI, Anthropic, and Meta Platforms lining up to receive them.

Helios is the company's answer to Nvidia's (NASDAQ: NVDA) new Vera Rubin AI platform, which is on pace for the fastest sales ramp-up in that company's history. With that type of success, plus the fact that Advanced Micro Devices' data center revenue grew at a similar rate to Nvidia's data center revenue in their most recent quarters, it's reasonable to assume that Helios sales will meaningfully accelerate AMD's data center revenue growth.

Nvidia guided for 70% year-over-year revenue growth in its fiscal 2028 before it even delivered its fiscal 2027 third-quarter results. That type of confidence bodes well for its peer, especially as data center revenue is becoming a larger part of Advanced Micro Devices' business.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.