Key Points
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Advanced Micro Devices (AMD) supplies some of the world’s best data center chips for artificial intelligence workloads.
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CEO Lisa Su issued increasingly bullish guidance for the company’s data center business over the last two quarters.
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AMD will release its second-quarter operating results on Aug. 4.
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Advanced Micro Devices (NASDAQ: AMD) has become one of the world’s top suppliers of graphics processing units (GPUs) for data centers, which are the primary chips used in artificial intelligence (AI) training and inference workloads.
The company will release its operating results for the second quarter of 2026 (ended June 30) on Aug. 4, and if previous reports are any indication, CEO Lisa Su is likely to issue highly bullish forward sales guidance, which will be very good news for investors.
AMD is gearing up to ship its best chips yet
Nvidia (NASDAQ: NVDA) had a near-monopoly in the AI data center market with its H100 GPU until 2023, when AMD entered the race with the MI300X. It attracted some of Nvidia’s top customers, like Microsoft and Oracle.
AMD has since launched several new generations, including the MI350 and MI400 series, further expanding its customer base. But later this year, the company will start shipping its MI450 series GPUs, which can be customized to suit the needs of specific data center operators.
Customers who configure the MI450 chips in AMD’s new Helios data center rack could unlock 36 times the performance of the company’s previous-generation GPUs. That’s because Helios includes specialized networking components and software to extract the maximum processing speeds from each chip.
During her last quarterly conference call with investors on May 5, AMD CEO Lisa Su said several major customers were enquiring about large-scale deployments of MI450 GPUs. OpenAI and Meta Platforms have each signed agreements to deploy 6 gigawatts of AMD’s chips over the next few years, starting with the MI450. I expect to see further customer updates on Aug. 4.
Lisa Su could deliver bullish forward guidance for AMD’s data center business
AMD generated $10.3 billion in revenue in the first quarter of 2026, which was a 38% increase from the year-ago period. Its data center segment accounted for more than half of that total, with revenue soaring by 57% to $5.8 billion.
Over the last few quarters, Lisa Su has issued increasingly bullish forward guidance for the data center business. While recapping AMD’s fourth-quarter 2025 operating results on Feb. 3, she told shareholders to expect annual revenue growth of 60% from the segment over the next few years, only to revise that forecast higher to 80% in her remarks on May 5.
Although some risks have emerged surrounding the rising cost of serving AI models, none of AMD’s hyperscale customers have announced plans to reduce their data center spending. As a result, I think Su could deliver more bullish guidance during her second-quarter conference call on Aug. 4, particularly surrounding demand for the MI450 series.
Should investors buy AMD stock ahead of Aug. 4?
AMD’s business is certainly firing on all cylinders right now, but paying the right price for its stock could be the difference between suffering losses and yielding a positive return. Based on the company’s trailing 12-month adjusted (non-GAAP) earnings of $4.58 per share, its stock is trading at a sky-high price-to-earnings (P/E) ratio of 121.8.
For some perspective, Nvidia currently trades at a P/E ratio of just 32.2, so AMD is almost four times as expensive as its closest competitor. A premium of that magnitude is difficult to justify, considering Nvidia is still the undisputed leader in the market for artificial intelligence data center GPUs, so it won’t be easy for AMD stock to continue marching higher from the current level.
According to Wall Street’s average estimate (provided by Yahoo! Finance), AMD could grow its earnings to $13.28 in 2027, but that would place its stock at a forward P/E ratio of 42, which is still higher than Nvidia’s trailing P/E. Simply put, investors might be paying too much for AMD’s future growth potential.
As a result, while I think Lisa Su could deliver more positive news for shareholders on Aug. 4, I’m not rushing out to buy AMD stock ahead of the report.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool has a disclosure policy.
