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Continue \u00bb<\/a> <\/p>\n However, there’s another potent catalyst that has driven significant revenue and earnings growth for AMD in the past, and it’s about to return in a big way.<\/p>\n Microsoft (NASDAQ: MSFT) and Sony (NYSE: SONY) have long relied on AMD to design semi-custom chips for their gaming consoles. Citing a couple of AMD executives, a July 2024 report from Tom’s Hardware points out that AMD avoided bankruptcy back in the 2010s thanks to strong sales of its PlayStation 4 processor.<\/p>\n AMD was in dire straits around 15 years ago, deep in debt and struggling to grow revenue. However, the arrival of the PS4 and Microsoft’s Xbox One (which was also powered by an AMD semi-custom chip) in November 2013 gave the chip designer a major shot in the arm. While its overall revenue was down 2% in 2013, its graphics and visual solutions business (which included sales of semi-custom processors) saw a 55% jump in annual revenue to $2.19 billion.<\/p>\n AMD credited this solid performance to increased semi-custom revenue. Management pointed out that its semi-custom and embedded processor business accounted for 30% of its total revenue in the third and fourth quarters of 2013. AMD returned to revenue growth the following year, fueled by a 51% jump in revenue from the enterprise, embedded, and semi-custom (EESC) segment.<\/p>\n Cut to the end of 2020, and the launch of the next-generation PS5 and Xbox consoles in November that year gave the semi-custom business another big boost. AMD’s EESC revenue jumped by 65% during the year to $3.33 billion, outpacing the 45% growth in its overall revenue. What’s more, the segment’s revenue more than doubled the following year to $7.1 billion as more consumers upgraded to the latest consoles.<\/p>\n Story Continues <\/p>\n AMD has reclassified its business segments since then, and it now includes its semi-custom business within the client and gaming segment. The company reported $3.9 billion in gaming revenue last year, an increase of 51% over the previous year, fueled by strong demand for its semi-custom processors and gaming graphics cards.<\/p>\n AMD’s gaming business should start clocking stronger growth from next year as Sony and Microsoft are reportedly going to launch their next-generation consoles during the 2027 holiday period, per leaks and supply chain information. Their launches should trigger a major upgrade cycle as the current console models will be almost seven years old by then.<\/p>\n The good news for AMD investors is that it has already been locked in by both companies to supply semi-custom processors for their next consoles. Investors would do well to note that the PS5 and Xbox Series X and Series S have sold a combined 120 million units over the past five years.<\/p>\n So, AMD has a major catalyst in the bag that could complement the outstanding growth of its data center business, potentially setting the company up for stronger-than-expected long-term growth.<\/p>\n The stock is already primed for remarkable gains over the next five years <\/p>\n AMD’s non-GAAP (adjusted) earnings came in at $4.17 per share in 2025. In its November analyst day presentation, the company said that it expects to achieve earnings per share of more than $20 over the next three to five years. That would translate to an annualized growth rate of almost 37% over five years, which is quite impressive.<\/p>\n Additional growth drivers, such as the semi-custom business, could help it do better than that. But even if it achieves only $20 in earnings per share after five years and trades at 33 times earnings at that time (in line with the tech-laden Nasdaq-100 index’s earnings multiple), AMD stock could jump to $660.<\/p>\n That’s more than double its current price. However, don’t be surprised to see this semiconductor stock jump higher than that, driven by the catalyst of a video game console business that could lead the market to reward it with a premium valuation.<\/p>\n Should you buy stock in Advanced Micro Devices right now? <\/p>\n Before you buy stock in Advanced Micro Devices, consider this:<\/p>\n The Motley Fool Stock Advisor analyst team just identified what they believe are the\u00a010 best stocks<\/a> for investors to buy now\u2026 and Advanced Micro Devices wasn\u2019t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.<\/p>\n Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you\u2019d have $496,797!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you\u2019d have $1,282,815!*<\/p>\n Now, it\u2019s worth noting\u00a0Stock Advisor\u2019s total average return is 979% \u2014 a market-crushing outperformance compared to 200% for the S&P 500.\u00a0Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built by individual investors for individual investors.<\/p>\n See the 10 stocks \u00bb<\/a><\/p>\n *Stock Advisor returns as of May 1, 2026. <\/p>\n Harsh Chauhan<\/a> has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy<\/a>.<\/p>\n![\"AMD](\"https:\/\/www.europesays.com\/ai\/wp-content\/uploads\/2026\/05\/d861f1d82c5fa5330a7dca28390ac2c8.png\")
Image source: The Motley Fool. AMD’s semi-custom business should get a major boost thanks to a new generation of gaming consoles <\/p>\n