Key Points
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AMD delivered terrific growth in Q3, and the good part is that it is poised to step on the gas in Q4 and next year.
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An acceleration in AMD’s earnings growth next year could send the stock soaring.
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Investors can buy AMD stock at an attractive valuation right now, which seems prudent given its growth potential.
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Shares of Advanced Micro Devices (NASDAQ:AMD) have been under pressure lately, and the company’s solid third-quarter results haven’t helped arrest the slide.
Specifically, AMD stock has lost 18% of its value over the past month. Concerns about a potential slowdown in the pace of the artificial intelligence (AI) infrastructure build-out have weighed heavily on tech stocks lately. This explains why the Nasdaq Composite plunged by a whopping 5.5% on Nov. 5. AMD lost over 11% of its value that day.
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However, savvy investors shouldn’t miss the bigger picture. AMD’s latest results clearly indicate that the pace of the AI build-out isn’t slowing down. In fact, I won’t be surprised to see AMD emerge from its rut and surge impressively over the coming year. Let’s see how much upside investors can expect from this semiconductor stock in the next 12 months.
Wall Street is confident of a big surge in AMD stock
AMD has a 12-month median price target of $650, according to 56 analysts covering the stock. That implies potential upside of 28%. What’s more, 49 analysts rate AMD as a buy, which isn’t surprising considering its attractive valuation and accelerating growth.
There is a strong likelihood that AMD will hit the Wall Street price target over the coming year. That’s because the company is poised for stronger growth, driven by the incredible demand for its data center chips.
The company’s Q3 revenue increased by 45% year over year to $13.4 billion, with the data center business playing a central role in this big surge. AMD reported a 97% increase in data center revenue from the prior-year period to a record $8.5 billion. The company is witnessing healthy growth in demand for its server central processing units (CPUs), graphics processing units (GPUs), and Helios rack-scale systems.
It is worth noting that major hyperscalers and AI companies, including Meta Platforms, OpenAI, Anthropic, Microsoft, and Oracle, are deploying AMD’s data center chip systems. AMD notes that the early demand for its latest generation of Epyc server processors, codenamed Venice, is the strongest that it has seen by far. AMD’s partners are poised to launch 20% more Venice server platforms compared to the previous generation Turin processors.
Similarly, AMD’s MI455X data center GPUs are also gaining strong traction among customers. All this explains why AMD is on track to deliver even stronger growth in the current quarter, followed by an impressive performance in 2027.
AMD is forecasting a 66% year-over-year increase in Q4 revenue to $17 billion, a big improvement over its Q3 growth. The company’s revenue in the first nine months of 2026 increased by 44% to $35.2 billion. The Q4 forecast suggests that AMD will end 2026 with a top line of at least $52.7 billion, which would be a 52% jump over last year.
For comparison, AMD’s 2025 revenue jumped by 34%. The good news for AMD investors is that the company is anticipating an 80% increase in revenue in 2028. This acceleration in AMD’s revenue growth next year should translate into a bigger increase in the company’s bottom line, which is precisely what analysts are anticipating.
AMD EPS Estimates for Current Fiscal Year data by YCharts
The stock could easily hit analysts’ expectations
AMD’s 2026 consensus earnings per share (EPS) estimate of $8.08, as seen in the above chart, points to a 94% jump over last year’s levels. So, next year’s forecast suggests that AMD’s bottom line is on track to more than double.
For comparison, the average earnings growth of the S&P 500 index is forecasted at 17% next year. AMD trades at 30 times forward earnings, which isn’t a big premium considering that the S&P 500 index has a price-to-earnings ratio of 23. Ideally, it should trade at a significant premium to the S&P 500 index.
Assuming AMD trades at 40 times earnings after a year and its EPS reaches $17.64 (based on consensus estimates), the stock could jump to $706. That implies a 39% jump, suggesting that it can outperform Wall Street’s expectations. So, investors can consider capitalizing on the recent drop in AMD’s shares and buying it right away, as there is a strong chance the stock will regain momentum and jump impressively in 2027.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Oracle. The Motley Fool has a disclosure policy.
