Advanced Micro Devices (AMD 3.12%) saw a nice turnaround in its fortunes in 2025 after a forgettable 2024, when it seemed that the company could miss out on the artificial intelligence (AI) data center boom. AMD stock shed 18% of its value in 2024, which is why the 65% jump in its shares in the past year has been a welcome relief for investors.
The good news for investors is that AMD remains attractively valued even after the impressive gains it has clocked in the past year. Buying it right now could prove to be a profitable move, considering the potential upside this semiconductor stock can deliver over the next five years.
Let's look at AMD's growth drivers and check how much upside investors can expect over five years.
Image source: AMD.
AMD's growth rate can improve substantially over the next five years
Three big catalysts could help AMD deliver a significant acceleration in revenue and earnings over the next five years. The first major growth driver to focus on is the company's data center business. This segment's growth is set to accelerate nicely from 2026, driven by improving demand for server processors and graphics cards used in artificial intelligence (AI) data centers.
The company has been pushing the envelope in AI data center accelerators, launching new chips and rack-scale systems so that it can eat into market leader Nvidia's share. For instance, AMD claims that its MI500 series of data center graphics processing units (GPUs), which it plans to launch in 2027, could deliver a 1,000-fold jump in AI compute performance when compared to the MI300X GPUs it launched in 2023.
AMD points out that its MI500 GPUs will be manufactured on a 2-nanometer (nm) process node, which should help them remain competitive against Nvidia's Vera Rubin GPUs, which are reportedly going to be manufactured on an identical process node. On the other hand, AMD estimates that its share of the server central processing unit (CPU) market, which is expected to grow from $26 billion last year to $60 billion in 2030, could grow to more than 50% by the end of the decade.
That would be a nice improvement over the 28% server CPU share that AMD controlled at the end of the third quarter of 2025, according to Mercury Research. All this explains why AMD is forecasting annual growth of 60% in the data center business over the next three to five years, up from the 52% annual growth witnessed in the past five years.
The gaming business is the next notable catalyst for AMD to keep an eye on over the next five years. Microsoft, a major player in the console gaming market with its Xbox gaming consoles, has already announced that it is in a multiyear partnership with AMD to develop semi-custom processors for its gaming devices.
Even Sony is expected to stick with AMD's chips for the next-generation PlayStation 6 console. Reports suggest that Sony and Microsoft could launch their next-gen consoles next year, paving the way for stronger growth in AMD's gaming revenue. The launch of new gaming consoles by Microsoft and Sony has historically brought windfall gains for AMD, and investors can expect a similar outcome in the next five years as well.
And finally, the company has been targeting the fast-growing AI-enabled personal computer (PC) market as well by launching processors capable of processing on-device AI workloads. This business is turning out to be a solid growth driver for the company, with its client processor revenue rising an impressive 46% year over year in the third quarter of 2025.
The size of the AI PC market is expected to nearly triple over the next five years, according to a third-party report. Importantly, AMD has been gaining share at a healthy pace in this segment. AMD's revenue share of the client PC market increased to an estimated 28% in 2025 from 20% in 2024. The company expects to corner a 40% revenue share of the client PC processor market over the next three to five years.
NASDAQ: AMD
Key Data Points
AMD believes that its combined client and gaming revenue could grow at more than 3 times the rate of the end market through 2030. In all, the solid prospects of the data center, client, and gaming businesses are the reasons why management expects its revenue to increase at an annual rate of 35% over the next three to five years.
Additionally, it expects its operating margin to increase to more than 35% in the long run, up from an estimated reading of 24% in 2025. Not surprisingly, the company is forecasting outstanding earnings growth, which could help it become a multibagger.
Here's why the stock could become a multibagger
AMD estimates that its annual earnings could exceed $20 per share over the next three to five years. That would be a fivefold increase over AMD's projected 2025 earnings of $3.97 per share. If AMD can indeed achieve the $20 earnings-per-share target by 2030 and trades at 25 times earnings at that time (in line with the tech-laden Nasdaq-100 index's forward earnings multiple), its stock price could jump to $500.
That would be more than double AMD's current stock price, suggesting that it has the potential to become a multibagger over the next five years. However, bigger gains cannot be ruled out as the sharp increase in its earnings over the next five years could lead the market to reward it with a higher multiple than the index's average.
Also, AMD is undervalued considering its growth potential with a price/earnings-to-growth ratio (PEG ratio) of just 0.5, according to Yahoo! Finance. The PEG ratio is calculated by dividing a company's trailing earnings multiple by its projected annual earnings growth over the next five years. A reading of less than 1 means that a stock is undervalued.
All this makes AMD a solid growth stock to buy right now as it seems capable of sustaining its impressive rally over the next five years.
