AMD (AMD) is consistently delivering explosive growth as demand for artificial intelligence (AI) infrastructure drives sales of its CPUs and GPUs. The company's data center segment has been the primary growth driver, expanding at a significantly faster rate than AMD's overall business.
AMD reported second-quarter revenue of $11.5 billion, representing a 50% increase from the same period a year earlier. Stronger demand across its EPYC server processors, Instinct accelerators, Ryzen products, and embedded offerings supported growth.
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The data center segment again registered solid growth, with revenue surging 107% year-over-year (YoY) to a record $6.7 billion, helped by robust demand for EPYC CPUs and Instinct AI accelerators.
Within the data center segment, AMD's server business also continued to gain momentum, marking its fifth consecutive quarter of record server CPU revenue. Both cloud and enterprise demand remained strong, with sales in each category increasing by more than 70% year over year.
The company's AI-focused data center business has been impressive, with revenue more than doubling from the prior year. Increasing adoption of AMD's Instinct accelerators has been a major contributor to this growth. Demand for the MI355X continues to expand as major AI companies deploy the chip across a broader mix of training and inference workloads. At the same time, cloud and infrastructure providers are increasing the availability of AMD's MI350-series accelerators.
With AI infrastructure spending expected to remain a major industry growth driver, AMD's data center business has significant room to expand in the second half of this year and in fiscal 2027. In addition, its strong top-line growth is translating into solid earnings. Despite these favorable growth prospects, AMD shares are currently trading about 19% below their 52-week high, providing an opportunity to buy.
AMD's Data Center Revenue to Double in 2027
AMD's data center business is positioned for a significant acceleration in 2027 as AI infrastructure moves from experimentation toward broader production deployment. The expansion of AI workloads across an increasingly diverse set of applications is expanding the addressable market for both server CPUs and AI accelerators.
For AMD, this broader market opportunity, along with a strong product portfolio and increasing customer adoption, is expected to support a significantly faster growth trajectory for its data center business. As a result, demand for AMD's CPUs and AI accelerators is likely to continue increasing.
Within data center AI, the expanding deployment of Helios and MI450-series Instinct solutions provides a strong foundation for growth during the second half of 2026, with momentum anticipated to strengthen further in 2027.
AMD's server CPU business is also benefiting from robust customer demand and improving supply conditions. The company expects server revenue to increase by more than 80% YoY during the second half of 2026 and by more than 70% across full-year 2027, despite the comparison being against a significantly higher revenue base. In addition, the emergence of agentic AI is expected to create another significant source of demand for server CPUs.
Overall, accelerating AI adoption, expanding accelerator deployments, and sustained demand for server processors are expected to drive AMD's data center segment revenue to more than twice its prior-year level in 2027.
Earnings to Double in 2027
AMD looks well positioned for another strong year of earnings growth in 2027. Solid revenue growth, combined with a better mix of higher-margin businesses, should help support the company's profitability through the second half of 2026 and 2027.
AMD's server business is expanding rapidly, benefiting from a growing total addressable market (TAM) and accelerating demand. This higher-margin business mix should positively contribute to AMD's overall gross margin.
At the same time, AMD's embedded segment is showing signs of a meaningful recovery. Management expects this business's improving performance to provide an additional boost to gross margins in 2027. These factors provide a solid base for sustained earnings per share (EPS) growth.
Current analyst estimates point to a 109.1% increase in AMD's earnings in 2027. Given the company's accelerating growth prospects, earnings forecasts could be revised upward further as momentum strengthens.
Analysts Say AMD Stock Is a "Strong Buy"
Strong demand for AMD's AI accelerators and server CPUs, combined with an improving product mix, could drive data center revenue and overall earnings to more than double by 2027.
With AMD stock still trading 19% below its 52-week high, the recent pullback could present an attractive entry point for investors.
Wall Street analysts remain bullish on AMD, with a "Strong Buy" consensus rating. The average analyst price target of $621.83 implies approximately 36% upside from its recent closing price.
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. This article was originally published on Barchart.com
