Advanced Micro Devices (AMD +2.49%) has long been a formidable leader in the semiconductor industry. Yet the company's true expertise now shines brightest in the design of graphics processing units (GPUs) and specialized AI accelerators. These chips are the indispensable engines of modern artificial intelligence (AI) development, enabling the massive parallel computations required to train and deploy sophisticated models.
As hyperscalers race to expand their data center capacity with ever-growing capital expenditure (capex) budgets, AMD is uniquely positioned to capture a meaningful share of the infrastructure boom and deliver robust shareholder returns over the next couple of years.
Image source: The Motley Fool.
Move over, Nvidia -- AMD is making inroads with big tech
Despite Nvidia's first-mover advantage in the AI accelerator market, AMD has steadily secured a number of high-profile big tech wins that validate the company's competitive technology and open ecosystem.
Microsoft recently announced that it will be integrating AMD's Helios suite across Azure to support frontier model inference and scaling AI workloads. Helios provides access to AMD's Instinct MI455X GPUs, EPYC Venice CPUs, Pensando networking data processing units (DPUs), and ROCm software ecosystem.
In addition, Meta Platforms committed to a multi-year deployment of up to 6 gigawatts of AMD Instinct GPUs, starting with an MI450-based architecture launching in the second half of this year.
OpenAI is similarly locked in a 6-gigawatt multi-generation partnership centered on the MI450 platform. More recently, Anthropic announced a strategic partnership to deploy up to 2 gigawatts of MI450-series accelerators, with AMD also committing an equity investment of up to $5 billion in the frontier lab to deepen the relationship.
These contracts de-risk AMD's growth trajectory by providing multi-year revenue visibility, reducing reliance on any single customer, and proving that leading AI developers view the company as a credible, high-performance alternative capable of meeting their compute needs.
NASDAQ: AMD
Key Data Points
What does Wall Street expect from AMD over the next couple of years?
Consensus estimates from Wall Street analysts paint a picture of accelerating demand that underscores AMD's expanding role in the AI infrastructure build-out. Revenue is projected to climb from roughly $50 billion in 2026 to over $100 billion by 2028. Earnings per share (EPS) are expected to follow a similar path, rising from $7.50 this year to about $20 by 2028.
AMD Revenue Estimates for Current Fiscal Year data by YCharts
This represents compound annual growth rates exceeding 50% for both top- and bottom-line metrics over the next two years. All told, this forecast signals that demand is not merely continuing but intensifying as hyperscalers translate data center build-out plans into sustained silicon procurement.
Can AMD stock double by 2028?
AMD currently trades at a forward price-to-earnings (P/E) multiple of 64. Given the company's undeniable valuation expansion over the last year, I think the chances of sustaining a multiple this frothy through 2028 are slim.
AMD PE Ratio (Forward) data by YCharts
Even if AMD's forward P/E were to compress to a range of 48 to 52, this would imply a stock price between $960 and $1,040 should the company achieve the 2028 EPS target of $20. This represents share price appreciation up to 101%, given AMD's current stock price.
I think this is a reasonable outcome given AMD's elevated growth profile, the scarcity of pure-play AI accelerator suppliers, and the market's historical willingness to award premium valuations to semiconductor leaders capturing secular AI-driven tailwinds. AMD presents a compelling opportunity for investors seeking exposure to the next phase of AI infrastructure spending.
