Advanced Micro Devices (AMD) shares broke above the $500 mark on Tuesday, surging 7.78% to close at $503.89 and reaching a new 52-week high of $506.96. The rally was fueled by robust demand for AI infrastructure, which has been a key driver for the semiconductor sector. Over the past 30 days, AMD's stock has gained more than 50%, and it is up 135% year-to-date, according to FinanceCharts data.
The broader market also celebrated the reopening after the Memorial Day holiday, with the S&P 500 and Nasdaq closing at all-time highs. The Philadelphia Semiconductor Index (SOX) surged 5.5%, also reaching a record close, reflecting widespread optimism in chip stocks.
OneQode announced on Tuesday that it will deploy AMD Instinct GPUs as part of its AI infrastructure expansion across multiple regions, also relying on AMD Helios rack-scale systems for the rollout. This news provided further evidence of growing demand for AMD's AI hardware. Negin Oliver, AMD's corporate vice president for AI business development, emphasized the need for high-performance compute and an open software ecosystem to handle heavy AI workloads, as reported by PR Newswire.
Investors are increasingly valuing AMD based on its data-center unit. The company reported first-quarter revenue of $10.3 billion on May 5, up 38% year-over-year, with data center revenue of $5.8 billion, a 57% increase. CEO Lisa Su noted that data centers are now the primary driver of both revenue and profit growth, and she expects server growth to accelerate meaningfully as supply ramps up. AMD also guided second-quarter revenue to approximately $11.2 billion, plus or minus $300 million.
The chip sector received a boost from Micron, which jumped 19% after UBS raised its price target to $1,625 from $535. Other chipmakers like Qualcomm and Marvell also moved higher. Intel, AMD's main CPU competitor, gained 3.0%, while Nvidia, the leader in AI chips, edged down in after-hours trading.
Analysts see AMD's story evolving beyond just challenging Nvidia in graphics chips. Matt Britzman, senior equity analyst at Hargreaves Lansdown, described it as a broader compute opportunity, with both CPUs and GPUs in play. At least 20 brokerages raised their AMD price targets after its outlook, with Evercore ISI setting the highest at $579, according to Reuters and LSEG data.
However, some caution remains. AMD's price-to-earnings ratio stands at 155.8, indicating a high premium relative to earnings. The consensus price target of $411.03 is below Tuesday's closing price, suggesting that expectations may be running ahead of results. Delays in MI450 or Helios rollouts, supply constraints, or slowing cloud orders could turn the $500 level into a crowded trade rather than a clear upward move.
Later this week, Marvell and Dell are set to report earnings, providing further insight into AI hardware demand. Investors will be watching to see if AMD's rally is sustainable or if it begins to stand alone as other companies report.
