Last week was a big one for Advanced Micro Devices (AMD -5.09%) as it launched Helios, its rack-scale system that's designed for artificial intelligence (AI). The company already has some large tech companies lined up for it, including Microsoft and Meta Platforms.
Shares of AMD have already been flying high this year as investors have been bullish about the company's products potentially serving as viable alternatives to Nvidia's, with hopes that Helios may help take significant market share from the tech giant. Could the launch of Helios be what's needed for AMD's stock to rise even higher and for it to join the trillion-dollar club this year?
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AMD's growth rate has been improving, but it may need to go into another gear
There's a lot of excitement around Helios, but what may matter most to investors is what the company's numbers and guidance look like when AMD releases earnings next week. AMD's growth rate has been picking up in recent years, but the company may need to do more to convince investors it deserves a higher valuation.
AMD Revenue (Quarterly YoY Growth) data by YCharts
While 38% growth is impressive, I would expect to see far better numbers for a stock trading at more than 160 times trailing earnings, as AMD is; investors are already pricing in high expectations for future growth.
Any guidance AMD releases in this upcoming quarter may be too early to suggest if demand for Helios is in line with expectations just yet. But later this year, that will certainly be a key growth metric for investors to watch.
Will AMD's stock hit a $1 trillion valuation in 2026?
For AMD to reach $1 trillion in market cap this year, it will need to rise by approximately 28% from today's valuation of roughly $780 billion. It's not unreasonable for that to happen, given how hot the tech stock has been, but it's not a scenario I think is likely, given its high valuation and the rising concerns investors have about AI stocks of late.
NASDAQ: AMD
Key Data Points
Based on its current valuation, I think there's a stronger bearish case to be made for why AMD stock can go lower than a bullish one, and why it can go higher. I don't think AMD will get to $1 trillion this year, but it is a possibility in the long run. A lot, however, will depend on how well Helios performs and how much market share AMD ends up taking from Nvidia.
For long-term investors, AMD can still be a good buy, but it may require a best-case scenario for the stock to hit $1 trillion in market cap this year.
