AMD (AMD) stock has had an incredible run this year, rising 184% year-to-date (YTD) and recently hitting a new high. Over the past 12 months, the stock has gained more than 270%. Much of that momentum comes from strong demand for AMD’s CPUs and GPUs as companies continue to invest heavily in artificial intelligence (AI).
But it’s not just higher demand helping AMD. The company is also benefiting from favorable pricing, which is supporting revenue growth and helping improve profitability.
Even after such a big rally, several reasons suggest the company’s long-term growth story remains intact and the stock has further upside.
AMD’s Acquisitions Strengthen Its Growth Prospects
Advanced Micro Devices recently announced the acquisition of World Labs, an AI research and model-development company, strengthening its long-term outlook. The deal is expected to bring a highly experienced team of researchers and AI model specialists to AMD, enhancing the company’s ability to develop hardware, software, and integrated systems tailored to emerging AI models and applications.
The acquisition will strengthen AMD’s presence in robotics and physical AI, creating solid growth opportunities for long-term growth.
In addition, AMD is also acquiring Taalas, a company that specializes in AI inference chips. Inference presents a significant growth opportunity as businesses move from training AI models to actually using them at scale. As these workloads become more specialized, having hardware designed specifically for inference could become a major advantage.
The Taalas acquisition fits into AMD’s broader strategy of building a full-stack AI platform. The goal is to provide customers more flexibility to choose the right computing solution for different AI workloads. Taalas could add another important piece to that strategy by bringing specialized inference technology focused on performance and efficiency.
Taken together, the World Labs and Taalas acquisitions significantly expand AMD’s AI capabilities. At the same time, the company’s business continues to benefit from strong demand for its chips.
Positioned for Rapid Growth
AMD’s recent acquisitions strengthen its long-term outlook, while its expanding product portfolio and rising customer adoption position the company for substantial growth. Its data center business could accelerate significantly in 2027 as AI infrastructure shifts from experimentation toward large-scale production. The growing range of AI applications is also increasing demand for both server CPUs and AI accelerators.
The rollout of AMD’s Helios platform and MI450-series Instinct accelerators is expected to support data center growth through the second half of 2026 and into 2027. Meanwhile, strong demand and improving supply conditions are supporting AMD’s server CPU business. The company anticipates server revenue growth of more than 80% year-over-year (YoY) in the second half of 2026 and over 70% for full-year 2027, despite increasingly difficult comparisons. The rise of agentic AI could further boost demand for server processors.
Together, increasing AI adoption, expanding accelerator deployments, and sustained CPU demand could drive AMD’s data center revenue to more than double its previous-year level in 2027.
AMD’s rising revenue and favorable product mix are expected to improve its margins and overall profitability. The company’s expanding server business is benefiting from a larger total addressable market and strong demand, creating favorable conditions for gross margin expansion. In addition, large incremental revenue opportunity from data center AI will translate into stronger earnings growth.
Thanks to solid business momentum, analyst estimates currently call for AMD’s earnings to rise by about 111% in 2027 after almost doubling in 2026. Its strong revenue and earnings growth will continue to support the ongoing rally in its share price.
Time to Load Up on AMD Stock
AMD’s prospects remain solid, led by sustained AI demand, expanding data center opportunities, and improving earnings power. The World Labs and Taalas acquisitions will broaden AMD’s AI capabilities, while the Helios platform and MI450-series accelerators provide additional catalysts for data center growth. At the same time, continued strength in server CPUs should support revenue diversification and margin expansion.
In addition, AMD's solid revenue and earnings growth justifies its elevated valuation.
Analysts maintain a bullish view on AMD, reflected in the “Strong Buy” consensus rating. Thanks to its incredible run this year, the stock is trading quite closely to its average price target, but the high target of $1,250 suggests a 105% upside remains.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.