Shares of Advanced Micro Devices (AMD) have cooled off in recent weeks, slipping 15% over the past month. The pullback follows a remarkable run. Notably, AMD stock surged nearly 97% over the last six months, powered by excitement around artificial intelligence (AI) and the company’s growing share in the data center market.
Investors have also been encouraged by AMD’s expanding partnership network, including OpenAI and Oracle (ORCL). The company is positioning itself as the primary alternative to Nvidia (NVDA) in the race to supply high-performance GPUs for AI workloads. This has boosted investors’ sentiment on AMD stock.
But the competitive landscape is shifting. A recent report from The Information indicates that Meta Platforms (META) is considering a multibillion-dollar investment in Google’s (GOOGL) custom AI chips. If Google’s Tensor Processing Units (TPUs) continue gaining momentum, major buyers could start diverting spending away from GPU suppliers such as Nvidia and, importantly, from AMD, which has been capitalizing on the industry’s desire to avoid overreliance on a single vendor.
This potential shift adds uncertainty just as AMD is emerging as the top challenger in the AI chip arena. A growing appetite for Google-designed silicon could complicate that narrative in the near term.
Still, AMD’s long-term story looks compelling. During its recent Financial Analyst Day, the company projected robust growth over the medium term, citing accelerating AI demand and continued innovation across its product lineup.
AMD’s management projects that total revenue will increase at a compound annual growth rate (CAGR) of more than 35% over the next three to five years. Profitability is also expected to scale meaningfully, with adjusted operating margin anticipated to surpass 35%, up from 24% at the end of Q3 2025. Additionally, the company forecasts adjusted earnings per share (EPS) to exceed $20 as operating leverage improves.
The biggest catalyst for its strong growth forecast is its booming data center business, projected to grow at a 60% CAGR. As the company continues to build out its multi-generational EPYC server CPU lineup, it aims to secure more than half of the server CPU revenue market and capitalize on the rising global demand for high-performance computing.
