Advanced Micro Devices (AMD) will announce its first quarter 2026 financial results on Tuesday, May 5. Ahead of the Q1 earnings, AMD stock has rallied significantly, rising almost 60% in the past month. This notable jump in AMD stock is driven by strong AI-related demand for its Instinct GPUs, along with increasing adoption of CPUs across the broader AI ecosystem.
The ongoing investments in AI infrastructure are boosting demand for CPUs, supporting AMD’s overall growth. On top of that, rising CPU prices are expected to further strengthen the company’s revenue and earnings.
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Given these favorable demand and pricing trends, AMD appears well-positioned to deliver solid growth, which could help sustain the recent momentum in its stock. Even so, investors should be cautious as AMD shares have declined after each of the past four earnings reports, including a 17.3% drop following its Q4 release. Still, the stock has rebounded after these declines and gone on to post strong gains.
www.barchart.com AMD’s Data Center Business to Deliver Strong Growth in Q1
AMD is set to deliver a strong first-quarter performance, driven by sustained momentum in its data center segment. The company’s data center business is growing at a solid pace, and the segment’s revenue marked 39% year-over-year (YOY) to $5.4 billion in Q4.
The company reported record Instinct GPU revenue in the previous quarter, supported by the ramp-up of MI350 shipments. This momentum will be sustained by growing engagement with existing hyperscale and enterprise partners and by adding new customers.
Meanwhile, in the server market, AMD continues to benefit from strong adoption of its EPYC processor lineup. Fifth-generation EPYC CPUs accounted for more than half of total server revenue in Q4. At the same time, fourth-generation EPYC processors are maintaining robust demand, indicating a healthy multi-generation product cycle. Strong adoption of its products indicates that AMD will likely achieve record server CPU sales across both cloud and enterprise segments throughout 2026.
AMD’s first-quarter revenue is projected to reach approximately $9.8 billion, representing a 32% YOY increase. While the data center business will likely be the primary growth catalyst, contributions from the client and gaming segments are expected to be meaningful.
Despite ongoing investments in AI and data center infrastructure, AMD is expected to deliver margin expansion, supported by solid top line growth and a favorable product mix. This is likely to translate into solid earnings growth.
Wall Street expects AMD to report earnings of $1.06 per share for the quarter, implying a YOY increase of 35.9%.
Overall, AMD is well-positioned to benefit from structural demand in AI and cloud computing. Further, operating leverage and a favorable product mix will help AMD to deliver strong bottom line growth.
Will AMD Stock Sustain the Uptrend?
AMD stock has already seen a strong run, but its solid growth trajectory suggests further upside. The company is benefiting from robust demand for its Instinct GPUs and increasing adoption of its CPUs, which provide a solid base for continued expansion into 2026 and beyond.
Looking ahead, AMD’s EPYC processors and Instinct GPU roadmap position it well to significantly grow its data center business, increasing revenue in that segment by over 60% annually over the next three to five years. In addition, the company is on track to scale its AI business to tens of billions in annual revenue by 2027.
Profitability is expected to improve alongside revenue growth. As operating margins expand, AMD’s earnings should rise at a faster pace.
Wall Street remains optimistic, with analysts assigning AMD stock a “Strong Buy” rating. Although the stock trades at a relatively high forward price-to-earnings ratio of 61 times, it still leaves room for upside given its growth outlook. Analysts project AMD’s earnings-per-share (EPS) to jump by 78% in 2026. Moreover, the momentum will sustain in 2027, with EPS expected to grow by 60%.
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www.barchart.com On the date of publication, Sneha Nahata did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.