Shares of Advanced Micro Devices (AMD) continued their upward momentum in pre-market trading Monday, adding to a sharp rally that has placed the chipmaker firmly in the spotlight of the artificial intelligence hardware race. As of early Monday, AMD was indicated at $459.80, up 1.01% from Friday's close of $455.19, which itself marked an 11.44% surge.
The recent move reflects a notable shift in investor focus beyond the dominant AI chip players. Friday's trading saw semiconductors lead the broader market, with the S&P 500 and Nasdaq both hitting new records. AMD jumped over 11%, while Micron surged roughly 15.5% and Intel also rallied on renewed enthusiasm for data-center demand, according to a Monday note from Saxo.
Strong Earnings and Data-Center Growth
AMD's first-quarter results, reported last week, showed revenue rising 38% year-over-year to $10.3 billion. Data-center sales were a standout, surging 57% to $5.8 billion, driven by strong demand for EPYC server processors and Instinct GPUs used in AI workloads. For the current quarter, AMD guided revenue of approximately $11.2 billion, plus or minus $300 million.
CEO Lisa Su described data center as the "primary driver" behind AMD's revenue and earnings gains, highlighting robust demand in inferencing and agentic AI—technology designed for systems that operate with minimal human input. CFO Jean Hu noted "record quarterly free cash flow," as the company balances growth investments with efforts to improve margins.
Wall Street Turns Bullish
Analysts responded quickly to the results. Goldman Sachs upgraded AMD to Buy and doubled its price target to $450 from $240, with analyst James Schneider pointing to agentic AI boosting server CPU prospects. Bernstein also turned more bullish, moving to Outperform and raising its target to $525 from $265, with analyst Stacy Rasgon describing AMD's larger server ambitions as "potentially plausible."
Barclays labeled AMD "one of the most interesting plays in AI right now," while Jefferies titled its note "Server CPU Steals the Show." Bank of America laid out an aggressive scenario where AMD could capture nearly half of the $120 billion server CPU market the company itself targets by 2030.
The CPU Opportunity and Competitive Landscape
The central processing unit (CPU) angle is critical. While Nvidia dominates the GPU market for AI accelerators, AMD sees an opening as artificial intelligence moves from training models to real-world deployment. Cloud providers will need to expand CPU capacity alongside accelerators. AMD now projects the server CPU market will grow more than 35% annually, exceeding $120 billion by 2030.
Rivals are not standing still. Nvidia continues to set the pace for AI accelerator chips, while Intel is betting on its CPU strength and new manufacturing contracts to revive its prospects. Lynx Equity, citing a reported Apple chip partnership, said it prefers Intel over AMD, arguing the Apple deal gives Intel shares an extra boost.
Valuation Concerns Loom
Despite the bullish sentiment, some caution is warranted. AMD shares trade at about 42.4 times forward earnings, well above the five-year average of 30 and nearly double Nvidia's 21-times multiple, even as Nvidia commands a larger share of the AI market. Additionally, AMD faces headwinds from higher memory and component costs. CFO Jean Hu warned that gaming revenue in the second half could drop more than 20% versus the first half.
The rally has been impressive, but expectations are high. Monday's trading will test whether buyers remain confident in the broader compute thesis—encompassing CPUs, GPUs, cloud clients, and major AI rollouts—after last week's surge. With momentum on its side, AMD now faces the challenge of delivering on elevated expectations.
