Does The Move In AMD Stock Change Anything?

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Advanced Micro Devices (AMD) stock returned 132.2% in the year to October 21, 2026, against 16.5% for the S&P 500. Over that year, AMD’s data center chips grew into the larger part of its business, and management lifted its revenue growth target in its August 4, 2026 report. Because most of that stock gain was driven by investors paying more for each dollar of sales rather than earnings growth alone, this multiple expansion significantly raises the execution bar for AMD. Whether that projected 2027 revenue doubling arrives is the critical test for a stock now priced at 21.8 times trailing sales.

AMD Stock Rose Far Faster Than Its Sales

Most of the rise came from investors paying more for each dollar AMD sells. Revenue over the four quarters to June 2026 was 39.5% higher than a year earlier. That was a fast pace, but it fell well short of the stock’s gain. With the share price about 2.3 times its level a year earlier and sales about 1.4 times theirs, investors now pay about two thirds more for each dollar of AMD’s sales.

Investors did not pay up like that for every AI chip maker. Nvidia stock returned only 23% over the same year, even though its sales over its latest four quarters were 83.4% higher than a year earlier. At the latest close, AMD traded at 21.8 times sales, compared with 3.1 for the S&P 500.

Most Of AMD’s Revenue Now Comes From Data Centers

The business behind that price has changed shape. AMD’s data center business, which sells EPYC processors and Instinct accelerators, brought in a record $6.7 billion in fiscal Q2 2026. Management said in its August 4, 2026 call that the segment’s revenue was up 107% from a year earlier. That made it 58% of total revenue, up from 42% a year earlier. Management guided fiscal Q3 2026 revenue to about $13 billion plus or minus $300 million, compared with $11.5 billion in fiscal Q2.

The larger promise is for 2027, when management expects data center revenue to more than double. Management said Anthropic will deploy up to 2 gigawatts of MI450-series GPUs in AMD’s Helios systems, starting in the first half of 2027. Management has put the revenue from each gigawatt in the double-digit billions of dollars, and AMD also has gigawatt-scale deployments with OpenAI and Meta. The price appears to assume that the 2027 doubling arrives.

AMD Keeps Less Profit Per Dollar Than In 2021

AMD’s profit on each dollar of sales has recovered over the past year without returning to its 2021 high. The company’s operating margin was 15.7% over the four quarters to June 2026, up from 8.3% a year earlier. That figure is still below the 22% AMD reached in the twelve months to the end of fiscal 2021, and below the 18.5% for the S&P 500 as a whole.

Management said on that August call that it expects to keep improving gross margin, which is measured before operating costs. How gross margin moves through 2027 will depend on the mix of products sold.
AMD’s operating margin is the figure to watch when the company reports its fiscal Q3 2026 results.

Does This Mean You Should Act On AMD?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

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