Advanced Micro Devices (AMD) has underperformed over the past year, with its stock declining by 27%. This decline in AMD stock reflects its small share in the artificial intelligence (AI) market compared to Nvidia (NVDA). Moreover, broader macroeconomic uncertainties and regulatory hurdles like fresh export controls for its MI308X shipments to China, remain a drag.

Signs of a Turnaround in AMD Stock

Yet, the tides appear to be turning for AMD. 

The semiconductor company’s latest quarterly results reveal that it is gaining momentum, suggesting that its long-term growth story is intact.

In the first quarter of 2025, AMD delivered impressive financial results. Revenue surged 36% year-over-year to $7.4 billion, comfortably exceeding analyst expectations. This marked the fourth consecutive quarter of accelerating top-line growth, driven by solid demand for its EPYC server processors, Ryzen CPUs, and Instinct AI accelerators. Earnings per share (EPS) also topped estimates, as the company continued to expand its gross margin for the fifth straight quarter.

A key driver of AMD’s resurgence is its data center business. In Q1, revenue from this segment jumped 57% year-over-year to $3.7 billion, reflecting strong uptake of its latest 5th Gen EPYC processors. Hyperscale cloud providers are increasingly adopting AMD’s solutions to power their infrastructure, giving AMD a foothold in the fast-growing market. Furthermore, enterprise adoption will accelerate as new server platforms featuring EPYC processors become widely available in the coming quarters.

AMD’s AI business is growing at a solid pace. Revenue from its data center AI business marked double-digit growth in Q1, buoyed by the ramp-up of MI325X accelerator shipments. AMD is rapidly expanding its AI customer base. Moreover, hyperscalers are increasingly deploying AMD’s Instinct accelerators for various AI-driven applications, from generative AI search to recommendation engines.

Adding to its AI push, AMD recently acquired ZT Systems, a strategic move to bolster its system design capabilities. The company also began sampling its next-generation MI350 series accelerators, with full-scale production slated to begin mid-year. This will likely accelerate its growth in the future.

AMD’s client segment, primarily its consumer PC business, posted strong results. Client revenue soared 68% year-over-year, marking the fifth straight quarter of market share gains. AMD achieved record average selling prices (ASP) for its client CPUs, driven by an improved mix of high-end Ryzen desktop and mobile processors. The company remains confident in its ability to outpace the broader PC market growth in 2025, thanks to expanding adoption across consumer and commercial segments.

On the gaming front, revenue declined 30% year-over-year as weaker semi-custom chip sales for gaming consoles offset higher Radeon graphics card sales. However, the recent launch of the Radeon 9070 series, based on AMD’s new architecture, has been a bright spot. Early demand was robust, with first-week sales exceeding expectations.

AMD’s Growth Outlook Remains Strong

While export controls on MI308X shipments to China have created near-term headwinds, expected to reduce 2025 revenue by $1.5 billion, AMD’s robust product roadmap, including the MI350 and MI400 series accelerators, positions it well to capture long-term growth opportunities in AI and high-performance computing.

The midpoint of AMD’s Q2 revenue guidance of $7.4 billion reflects 27% year-over-year growth even after factoring in the impact of export restrictions. Looking further ahead, AMD expects continued momentum across its data center, AI, and client businesses to drive strong double-digit revenue growth in 2025.

Conclusion: Is AMD Stock a Buy?

From a valuation perspective, AMD stock appears attractively priced. AMD stock trades at a forward price-earnings (P/E) multiple of 30.8x. Given analysts’ projections of 27.5% EPS growth in 2025 and an even more impressive 47.9% growth in 2026, AMD’s valuation seems reasonable, if not compelling, for long-term investors.

While Wall Street maintains a “Moderate Buy” consensus on AMD, the combination of accelerating growth, momentum in the AI business, solid product roadmap, and a more attractive valuation suggests that AMD stock could offer meaningful upside over the next 12 months.