Since January 9th, shares of chipmaker AMD (NASDAQ:AMD) have been on a tear, delivering total gains of over 20 percent. Though the stock has performed extremely well over the past year, this sudden jump was unusual by virtue of not being tied to an earnings release. Why did AMD stock go up so much, and does it have more room left to run?
Why AMD Shares Are Rising
The largest driver of the recent AMD surge was its presentation at the Consumer Electronics Show, which included a new line of AI chips for personal computers. An extension of the Ryzen series of chips that first debuted in 2017, the latest version unveiled at CES could help AMD win in the race to integrate AI into everyday computers. According to the information AMD itself provided at the show, the latest Ryzen AI processor is up to 1.7 times faster at generating AI content than comparable competitor chips.
On the data center side, AMD also unveiled its latest generation of processors built for large-scale AI. This included the new Instinct MI455X, which AMD plans to sell to some of its largest customers. OpenAI alone has already contracted with AMD for 6 gigawatts worth of GPUs across the Instinct line, creating large future opportunities for revenue from the business at the core of the AI ecosystem.
These new developments could drive a surge in growth at AMD, which currently derives less than half of its total revenue from its data center business. For reference, NVIDIA derived almost 90 percent of its revenue in Q3 from the data center segment. As such, AMD could have a massive runway for rapid revenue growth if it can succeed in becoming a serious competitor to NVIDIA as a supplier of GPUs for data centers.
Cumulatively, the CES presentation produced a generally favorable response from analysts. The positive analyst comments also appear to have contributed to the rising share prices, bolstering what was already an enthusiastic investor response to AMD’s showing at CES. Some analysts even raised Q4 revenue estimates, anticipating stronger-than-expected results from AMD’s data center segment.
Is There More Upside in AMD?
Trading at almost 115 times its trailing 12-month earnings and almost 70 times operating cash flow, AMD doesn’t look cheap on paper. Owing to its potentially long and steep growth runway, though, many analysts expect the stock to go significantly higher over the next 12 months. The consensus price target of $283.75 would see AMD rise by another 23.3 percent, and three-quarters of the analysts covering AMD still rate it as a buy.
Institutional investment activity, however, may tell a somewhat more cautious tale. In the last six months, institutional investors have sold off over $34 billion worth of AMD while buying up just $15 billion. Though some of this activity can likely be explained by profit-taking as AMD’s prices have risen, it could also indicate that the stock is being perceived as risky at its higher prices by professional investors.
Can AMD Carve Out Market Share Against NVIDIA?
One of the most persistent questions about AMD is whether or not it will be able to establish a lasting moat in a space dominated by NVIDIA. Although AMD saw slight improvements in market share in Q3, NVIDIA still has a near-monopoly of more than 90 percent in the GPU market. Intel, the third GPU major, accounts for just 1 percent of the market.
AMD, however, could have a surprisingly positive set of opportunities going forward. In addition to its focus on the AI PC market, AMD is also set to roll out its Instinct MI500X GPUs next year. While the chips shown off at this year’s CES represented considerable improvements over the MI300X chips that have been AMD’s benchmark since 2023, the MI500X is expected to have approximately 1,000 times the MI300X’s performance. Such a huge leap in computing power in such a short period of time could make AMD a serious contender for hyperscalers outside of OpenAI looking to build the next generation of AI infrastructure while also reducing their reliance on NVIDIA.
Right now, demand for GPUs is likely expanding quickly enough for both NVIDIA and AMD to deliver strong growth rates. EPS growth at AMD is expected to remain at a compounded annual rate of about 45 percent through much of the rest of this decade, likely giving the stock a chance to justify its current high price tag. It’s worth noting that this is even higher than NVIDIA’s own projected growth rate over the same period, which is only about 36 percent.
Is AMD a Good Buy Today?
Despite being quite expensive, AMD could be a good buy as a play on both the gap in supply and demand for GPUs and the growing push among large AI businesses to diversify away from reliance on NVIDIA. With AMD focusing on its data center business and already being the second-largest GPU maker after NVIDIA, the business could be in a very strong position for long-term growth.
On the downside, AMD is among the businesses that are most likely to suffer if 2026 produces an AI market downturn. With significant revenue from its partnership with OpenAI already priced in, AMD is part of the increasingly circular ecosystem of large tech firms that sit at the top of the AI world. After making a string of large commitments to fuel its growth throughout 2025, OpenAI is raising alarms with some investors over potential problems meeting its future obligations.
Taking all of this into account, AMD looks like a high-risk, high-return investment proposition. The stock could be a buy for investors willing to take a chance on a business that could, over the next few years, become a serious competitor to NVIDIA and ride the ongoing wave of data center investment. If AI investment slows down, the market’s enthusiasm for AI wanes or AMD’s growth rate proves to be slower than analysts are currently expecting, though, the stock could move sharply lower due to its high valuation.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.