It has taken less than a year for shares of Advanced Micro Devices (AMD -0.18%) to double in value thanks to the company's impressive financial growth, driven by gains across diverse markets such as consumer graphics cards, central processing units (CPUs), and data centers.

AMD's hot rally looks justified considering that its revenue has shot up more than 41% year over year in the first nine months of 2020. The company's gross margin has increased two percentage points over the same period, while its diluted earnings per share have nearly quadrupled to $0.59 in the first three quarters of 2020.

Investors who have missed the AMD gravy train so far may feel disappointed, but it isn't too late to jump on this bandwagon, as this stock should be capable of replicating its terrific performance. Let's see why.

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AMD gets a big boost from the semi-custom business

AMD recently released its third-quarter results and posted a massive 56% year-over-year increase in revenue to $2.8 billion. The company's net income more than tripled to $390 million, compared to $120 million in the prior-year period, thanks to the big revenue jump and a slower increase of 32% in operating expenses.

More importantly, AMD is looking to close 2020 on a high. It anticipates 41% year-over-year revenue growth in the fourth quarter to $3 billion on the back of strong demand for "new Ryzen, EPYC, and semi-custom products." If AMD hits its expectations in the fourth quarter, it would finish the year with 41% revenue growth over 2019 levels, a nice bump over the company's prior expectation of a 32% increase in full-year revenue.

The reason why AMD now expects stronger full-year growth is because of a sharp spike in its revenue from the Enterprise, Embedded, and Semi-Custom (EESC) business. The segment generated $1.13 billion in revenue for the chipmaker last quarter, more than double the prior-year period's revenue of $525 million.

AMD attributes this jump to "higher semi-custom product sales and increased EPYC processor sales." The increase in semi-custom product sales was already expected, as the company is supplying chips to Sony (SONY 0.46%) and Microsoft (MSFT -0.25%) for their latest gaming consoles. Sony, for instance, is reportedly looking to make somewhere between 11 million and 15 million PlayStation 5 units in its current fiscal year, which ends in March 2021.

This indicates that Sony is estimating much higher sales of the PS5 in the initial months compared to its estimate of 5 million sales of the PlayStation 4 back in 2013. Industry watchers predict that the PS5 could be a much bigger success than its predecessor. Rakuten Securities analyst Norio Imanaka predicts that the console could move between 200 million and 300 million units within the next six years.

Hand drawing stock chart return.

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The PS4, for comparison, has shipped more than 112 million units since launching at the end of 2013. Similarly, the new Microsoft Xbox is also expected to be a major success, with shipments increasing steadily over the next few years -- hitting 44.3 million units in 2024, compared to an estimated 3.9 million units this year, according to analytics firm Ampere Analysis.

Rumors suggest that AMD could be making around $170 from each PS5 console, while the CPU/GPU (graphics processing unit) combo, the solid-state drive, and the memory on the latest Xbox Series X are expected to cost around $250. So AMD could win big if the new Sony and Microsoft consoles outpace their predecessors in terms of sales, as it stands to make much more from each new unit compared to the PS4.

The EPYC server business is in fine form as well. AMD is rapidly enhancing its server processor ecosystem by winning business at more cloud service providers and server original equipment manufacturers (OEMs). Companies like of Microsoft, Oracle, Amazon, Alphabet's Google, and others are increasingly using AMD's server processors, helping the company increase its share in this lucrative market, which could add billions to its revenue in the future. AMD hasn't provided an outlook for 2021 yet. But it could sustain its terrific growth next year, as the EESC business is on a growth trajectory and it supplied 40% of AMD's total revenue last quarter -- enough to move the needle significantly for the company.

New products will be a tailwind for the computing and graphics business

Computing and graphics is AMD's biggest business segment, with almost 60% of its total revenue. The segment delivered 30% revenue growth last quarter thanks to strong sales of its Ryzen processors.

AMD recently launched its latest-generation Ryzen 5000 processors based on the Zen 3 microarchitecture. The new processors are expected to close a critical performance gap with Intel, which is struggling to make the jump to a competing process node. As a result, AMD is likely to enjoy an upper hand over Intel in the CPU space over the next year, and capture more share of this market.

Similarly, AMD is expected to give NVIDIA a run for its money in the graphics card market with its latest Radeon RX 6000 series graphics cards, which are based on the new RDNA2 architecture. The chipmaker is taking aim at the premium end of the market with the new Navi 21 cards, with its new flagship expected to deliver more than double the performance of its predecessor.

All these new launches could help AMD keep up the impressive growth of its computing and graphics business, which has been chugging along nicely in 2020 so far. Meanwhile, AMD has confirmed that it will be acquiring programmable chip maker Xilinx in a deal worth $35 billion. This move could further improve its prospects in the data center and field-programmable gate array (FPGA) markets, and also give it access to fast-growing technology trends such as 5G (fifth-generation) wireless networks.

Not surprisingly, AMD's bottom line is expected to keep growing at a rapid pace in the coming year and beyond, according to analyst estimates compiled by Yahoo! Finance. That's why it wouldn't be surprising to see the chipmaker remain a top growth stock in the future, as it should be capable of doubling once again thanks to the catalysts it is sitting on.