What happened

Advanced Micro Devices (AMD 2.19%) shares are up 75.9% through the first six months of this year, according to numbers provided by S&P Global Market Intelligence. The stock was able to overcome a sizable year-over-year dip in first-quarter revenue and lackluster Q2 guidance, driven higher by hope for continued growth of its data center business.

So what

The company's recent and forecasted results are anything but great. After a solid fiscal 2022, AMD's first-quarter top line slipped 9% year-over-year, largely thanks to the weakening personal computer market. For the same reason, sales for the quarter ending in June are predicted to tumble by nearly 20%.In fact, shares briefly stumbled following the release of its Q1 numbers, which were short of top-line estimates.

Investors are keeping the bigger bullish picture in mind, however, bidding Advanced Micro Devices stock higher on hopes for its fast-growing data center business. The advent of artificial intelligence (AI) will fuel this growth.

While AMD has served the AI market for quite some time, the organization is only recently turning up the heat on the opportunity. Last month, it unveiled its new MI300 chip, which the company describes as the "world's most advanced accelerator for generative AI."

The new technology will better equip Advanced Micro Devices to compete with Nvidia in the AI arena. And it shouldn't take long to gain traction on this front. As CEO Lisa Su commented during the Q1 conference call, "We remain confident in our ability to grow in the second half of the year, driven by adoption of our Zen 4 product portfolio, improving demand trends in our client business and the early ramp of our instinct MI300 accelerators for HPC and AI."

As of this time, AMD's data center business (which includes AI) only accounts for around one-fourth of the company's total revenue. That relatively small proportion, however, just means there's room for meaningful companywide growth stemming from the ongoing expansion of the AI industry.

To this end, Precedence Research expects the AI hardware market to grow at an average annual clip of 27% through 2030. The overall AI solutions market itself could grow at an average annual pace of more than 39% for the same timeframe. At that point, it will be a trillion-dollar market and a massive profit center for AMD.

Now what

Advanced Micro Devices has never held the sort of market share that rivals Intel and Nvidia have. That doesn't matter to investors, however. It's still been capable of producing long-term growth, even if it suffers the occasional cyclical headwind (as it is now). Don't be discouraged by its relatively small size or somewhat inconsistent results.

In the meantime, don't let the stock's recent run-up discourage you either. Even with the 2023 rally, to date, the stock's merely back to its mid-2022 price and is valued fairly at around 24 times next year's projected per-share profits. For a growth name of this caliber, that's still a bargain.

Just be prepared for continued volatility.