Advanced Micro Devices AMD is strengthening its long-term bond with Microsoft MSFT to expand the deployment of its AI infrastructure across Microsoft Azure. Under the agreement, Microsoft will deploy AMD’s Helios rack-scale platform, combining Instinct MI455X GPUs, 6th Gen EPYC “Venice” CPUs, Pensando networking and ROCm software, to power frontier AI inference, Azure AI services and customer workloads. Azure will also introduce new EPYC-powered virtual machine series and expand the use of Pensando DPUs to enhance networking performance. AMD expects to begin shipping Helios systems, including to Microsoft, in the second half of 2026.
The expanded partnership strengthens AMD’s position as a strategic AI infrastructure supplier for hyperscale cloud providers by expanding beyond GPUs into CPUs, networking and software. AMD’s AI revenue opportunity expands through deployment of its integrated Helios rack-scale platform for large-scale inference workloads. The extended partnership with Microsoft expands AMD’s presence in Azure AI services and enterprise AI deployments, creating additional long-term infrastructure demand.
Management has highlighted that AI infrastructure demand is increasingly being driven by deep strategic partnerships with hyperscalers rather than one-time hardware sales. The company said customers are moving from pilot projects to large-scale production deployments, resulting in multi-generation engagements for both EPYC CPUs and Instinct GPUs. It cited partnerships with Meta, OpenAI and Microsoft as evidence that customers are co-engineering future AI platforms with AMD. These partnerships strengthen demand for Helios rack-scale systems and support AMD’s goal of generating tens of billions of dollars in annual Data Center AI revenues over time.
AMD expects server CPU revenues to grow more than 70% year over year in the second quarter of 2026, with robust growth continuing through the second half of 2026 and into 2027 as sixth-generation EPYC “Venice” processors ramp. AMD believes inferencing and agentic AI are fundamentally increasing CPU requirements for orchestration, data movement and head-node functions. AMD doubled its 2030 server CPU total addressable market estimate from about $60 billion to more than $120 billion.
Tough Competition Hurts AMD’s Prospects
AMD’s prospects suffer from stiff competition. NVIDIA NVDA and Broadcom AVGO are major competitors in the Data Center space.
NVIDIA is at the center of AI computing, with its products widely used across data centers, gaming and autonomous vehicles. The company’s newer Hopper 200 and Blackwell GPU platforms are being adopted quickly as customers work to grow their AI infrastructure. Data Center revenues reached $75.2 billion in the first quarter of fiscal 2027, up 92% from a year ago and up 21% sequentially, driven by the ramp-up of Blackwell 300 products and demand for InfiniBand, Spectrum-X Ethernet and NVLink solutions. NVIDIA remains AMD's primary rival in GPU-accelerated supercomputing.
Broadcom is benefiting from strong demand for its networking products and custom AI accelerators. In the second quarter of fiscal 2026, AI semiconductor revenues reached a record $10.8 billion, up 143% year over year and above management’s outlook. Broadcom expects AI semiconductor revenues to reach $16 billion in the third quarter of fiscal 2026, up more than 200% year over year. For fiscal 2026, management expects AI semiconductor revenues of $56 billion, up approximately 180% from fiscal 2025. Broadcom also reiterated that AI semiconductor revenues are expected to exceed $100 billion in fiscal 2027.
AMD’s Share Price Performance, Valuation & Estimates
AMD shares have jumped 147.3% year to date, outperforming the broader Zacks Computer and Technology sector’s growth of 12.1%.
AMD Stock’s Price Performance
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AMD stock is overvalued, with a forward 12-month price/sales of 13.09X compared with the broader sector’s 6.6X. AMD has a Value Score of F.
AMD Valuation
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The Zacks Consensus Estimate for 2026 earnings is pegged at $7.28 per share, up 1% over the past 30 days, suggesting 74.58% growth from the figure reported in 2025.
Advanced Micro Devices, Inc. Price and Consensus
Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote
AMD currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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