Does AMD Stock’s Run Make Any Sense Now?
Advanced Micro Devices (AMD) stock has returned 272% over the past twelve months through October 5, 2026, against about 16% for the S&P 500. If you are wondering whether you can still buy it, the answer is not simple. AMD’s business is growing quickly, but the stock has risen much faster than the business has. So what are buyers paying for at today’s price?
How Far Ahead Of AMD’s Profit Is The Price?
AMD stock trades at 160.2 times its earnings of the past twelve months, against 21.5 times for the S&P 500. That ratio is the price of a share divided by one year of profit per share. For the whole company, AMD earned $6.4 billion over those twelve months, and the market values it at about $1.03 trillion. A ratio that high means buyers expect much larger profits later.
AMD’s Stock Climbed Much Faster Than Its Revenue
AMD’s revenue was $41.3 billion over the past twelve months, up from $29.6 billion a year earlier. That is growth of about 40%, which is fast, yet the stock’s rise was several times larger.
Fast growth is not new for AMD. Its revenue rose 24.4% a year on average over the past three years, against 5.8% for the S&P 500.
AMD’s fastest growth is in the chips it sells to data centers. In the second quarter of 2026, data center revenue grew 107% from a year earlier to $6.7 billion. That business now brings in 58% of AMD’s total revenue, management said on the August 4, 2026 call.
AMD Sees Its Biggest Business More Than Doubling
Management said on the August 4 call that it expects data center revenue to more than double in 2027. That forecast may be what buyers are paying for today. AMD said one customer will begin deploying its AI chips in the first half of 2027.
But a forecast is not a result, and AMD first has to get the chips made. Management said the server CPU supply chain is tight because much of the demand for those chips was not expected. It expects much more capacity in 2027, but it also said that adding capacity on a new manufacturing process is always hard. Management also said it has supply to more than meet its 2027 forecast.
AMD is also using its shares to add AI researchers. On September 28, 2026, it announced an agreement to acquire World Labs for about $8.2 billion, paid in stock.
AMD’s third-quarter report comes next, the first since the August 4 call. Management forecast revenue of approximately $13 billion, plus or minus $300 million, against the $11.5 billion it reported for the second quarter. Revenue at or above $13 billion would suggest that AMD is getting enough data center chips made to keep growing. Revenue between $12.7 billion and $13 billion would meet the forecast but land in its lower half, which would leave the supply question open. Revenue below $12.7 billion, the bottom of that range, would mean AMD fell short of its own forecast.
How To Act On AMD?
Now you know AMD better. And that’s our purpose: to make you informed before you invest your money. However, making a bet on a single stock carries its own risks.
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