Over the past two years, Wall Street has treated artificial intelligence like a global race. Companies rushed to build data centers, hyperscalers ordered every GPU they could get their hands on, and investors piled into anything connected to AI infrastructure. But here’s the question smart investors should be asking now: What happens after the first phase of construction is over?
This is where Advanced Micro Devices (AMD) may have just changed the conversation.
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Its May 5 earnings report wasn’t just another beat and raise quarter. It was proof that AMD is becoming a leading provider of the next phase of AI—inference. That’s a fancy way of saying that everyday computer AI programs work after they’ve been trained. And that market could end up being much bigger than many investors expected.
AMD’s Stock We’ve Already Succeeded Before Earnings
Even before earnings, AMD shares have been outperforming much of the market. Its stock was up nearly 65% year-to-date (YTD) entering this week, compared with a roughly 6% gain for the benchmark S&P 500 ($SPX) over the same period.
That outperformance is important because semiconductor stocks are fiercely competitive. Investors have no shortage of AI names to choose from, including Nvidia (NVDA), Intel (INTC), Broadcom (AVGO), and Arm Holdings (ARM).
Yet AMD continues to gain market share.
Mercury research data cited by Tom’s Hardware showed AMD’s server CPU market share rising to around 29% by the end of 2025. That is no longer a “challenging” place. That’s the real scale.
Then came the salaries.
AMD reported first-quarter revenue of $10.25 billion, up 38% year-over-year (YoY), while adjusted earnings per share reached $1.37 compared to analyst estimates of around $1.29. But the real topic resided within the data center business. Revenue increased 57% to $5.8 billion.
Any way you look at it, that’s a number that changes AMD’s story.
The AI Gold Rush Goes to Its Next Phase
Training AI models grabbed early headlines because companies needed massive computing power to create systems like ChatGPT. But the imagination is where the repeated demand lives.
All questions. All chatbot response. All image generated by AI. All customer service interactions are automated. All of these require computing power on a daily basis. Lisa Su, CEO of AMD, highlighted that trend directly during the earnings release, saying that the need for “inferencing and agent AI” is growing.
Unsurprisingly, AMD also raised its long-term outlook for the server CPU market. The company now expects the market to grow more than 35% annually through 2030, compared to its previous expectation of annual growth of close to 18%. That’s a big update.
In terms of performance, AMD now believes that the server CPU market could exceed $120 billion by 2030.
And unlike a one-time AI training construct, inference requires compounding over time. Multi-gigawatt AI infrastructure projects from companies like Meta Platforms (META) and related partnerships with OpenAI suggest that this spending cycle may last longer than skeptics expect.
In short, AMD is no longer just a “second source” chipmaker standing behind Nvidia. Become the leading AI infrastructure platform.
AMD Ratings Still Risky
Granted, none of this means that AMD stock is cheap. Barchart data shows AMD trades at about 104 times trailing earnings and sales at about 16 times. The stock also trades around 62 times forward earnings with a PEG ratio close to 1.3.
That balance leaves little room for fatal errors. If business AI adoption slows, or if Nvidia widens its lead again, AMD shares could see sharp volatility. Semiconductor circuits rarely run in straight lines.
That said, AMD’s balance sheet remains healthy, with low leverage and growing profitability.
What Analysts Think About AMD Stock
Wall Street remains strong. Barchart analyst ratings confirm AMD maintains a consensus rating of “Strong Buy” based on 45 analysts, with 31 rating “Strong Buy”, two “Neutral Buy,” and 12 “Hold”.
Analyst price targets vary widely, reflecting both the opportunity and uncertainty surrounding AI demand. The average price target is $309.32, with $240 on the low end and $450 on the high end. With AMD shares up nearly 17% in afternoon trading on Wednesday, the stock is now considered an overbought, but analysts may soon raise their targets.
The Bottom Line
AMD’s latest earnings report was nothing short of strong. Clarify where the company fits into the AI economy.
The first wave of AI use was about building models. The next wave is about using them regularly—and that’s where AMD’s server CPU and accelerator business could be the engine of long-term growth.
When all is said and done, AMD looks less like a cyclical chip stock and more like a basic AI infrastructure company. That difference can be significant for years.
As of the date of publication, Rich Duprey did not have (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
