1 Reason to Buy AMD Stock Before 2027
Key Points
AMD expects 2027 revenue to grow more than 80% -- more than double its previous forecast.
Operating expenses should grow at less than half the rate of revenue, lifting margins and profits.
At about $487, the stock trades at roughly 20.5x 2028 earnings estimates.
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Advanced Micro Devices (NASDAQ: AMD) expects 2027 to be a bigger year than expected. Management updated its outlook after data center revenue surged 97% year over year in the third quarter. That momentum is the reason the stock is a timely buy before 2027.
At its analyst day in November 2025, AMD set a goal of growing revenue by more than 35% annually and earning more than $20 per share over the next three to five years. By August 2026, CEO Lisa Su said the company was tracking "materially ahead" of that plan.
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Following a strong third quarter, management now expects revenue to grow more than 80% in 2027. Server chip revenue should double, with data center AI revenue becoming more than 80% of the company's total revenue next year.
Image source: Getty Images.
Higher data center sales should boost margins. CFO Jean Hu expects operating expenses to grow at less than half the rate of revenue next year, driving a "very significant" margin expansion.
The main risk may not be a slowdown in AI spending but whether AMD can meet demand. Su said demand is higher than supply, so if AMD can't build chips fast enough, 2027 growth could fall short of its guide. But that's a problem of too many customers, not too few.
At about $487 per share as of midday trading on Nov. 4, the stock trades at roughly 30 times the consensus 2027 earnings estimate and 20.5 times 2028 estimates of $23.56. That's a reasonable price for a company with this much momentum, which makes the stock a buy ahead of potentially more new highs in 2027.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices. The Motley Fool has a disclosure policy.
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