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Advanced Micro Devices (NASDAQ:AMD) surged roughly 17% in premarket trading on Wednesday after the chipmaker delivered quarterly results and forward guidance that exceeded Wall Street expectations, driven largely by booming demand from the artificial intelligence sector.
Investor enthusiasm accelerated after chief executive Lisa Su highlighted strong momentum in AMD’s server and data center operations during the company’s earnings call.
Su said the data center segment had become the company’s largest source of revenue and projected server revenue growth of more than 70% year over year during the current quarter.
Meta partnership and AI demand strengthen growth outlook
The AMD chief also pointed to the company’s recent partnership with Meta to expand AI computing capacity, adding that product shipments tied to the agreement are expected to begin in the second half of the year.
AMD previously signed a $60 billion chip supply agreement with the owner of Instagram.
Su also outlined a stronger long-term outlook for the broader CPU market, forecasting annual growth of 35% and a total addressable market exceeding $120 billion by 2030.
According to analysts at Jefferies, this upgraded forecast has become a major catalyst behind the sharp rally in AMD shares. The revised projection was substantially above the company’s previous estimate from November, which projected 18% annual growth.
“While many stocks have been climbing strictly on vibes lately the company deserves significant credit for a fundamental story that increasingly is looking real,” wrote Stacy Rasgon of Bernstein in a research note.
Rasgon upgraded AMD to Outperform and lifted his price target to $525 per share. Analysts at Goldman Sachs also raised their recommendation on the stock.
AMD strengthens position in AI and server chip markets
AMD remains one of the leading semiconductor companies in the United States, designing processors and graphics chips used in personal computers, gaming systems, data centers and artificial intelligence applications.
The company is widely viewed as the largest competitor to Nvidia in the market for high-performance graphics processors powering AI workloads.
Although AMD still trails Nvidia in market share, its stock performance has significantly outpaced its rival in 2026. AMD shares are up 65.9% year to date, compared with a 5.4% gain for Nvidia and a 6.1% rise for the S&P 500.
Revenue and guidance exceed Wall Street forecasts
The Santa Clara-based chipmaker reported adjusted earnings of $1.37 per share on revenue of $10.25 billion for the first quarter of 2026.
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Analysts had expected earnings of $1.27 per share on revenue of $9.85 billion.
AMD said it expects second-quarter revenue of approximately $11.2 billion, plus or minus $300 million, well above analyst forecasts of $10.50 billion.
The outlook implies year-over-year revenue growth of 50.6% and quarter-over-quarter growth of 9.1%.
AI inference demand expands beyond GPUs
AMD’s results come as growing adoption of AI inference and agentic AI technologies increases demand for server CPUs, shifting investor focus beyond graphics processors as the sole beneficiaries of the AI boom.
The trend was also highlighted in recent quarterly results from Intel, which showed rising interest in server-related chips.
Investors are now closely watching whether AMD can continue capturing a larger share of the rapidly expanding server CPU market.
Data center division remains AMD’s key growth engine
AMD’s data center business, considered by investors to be the company’s most important growth driver, generated revenue of $5.78 billion during the first quarter, representing year-over-year growth of 57%.
The division benefited from strong demand for AMD’s EPYC processors and Instinct GPUs, which are widely used in cloud computing infrastructure and AI workloads.
Meanwhile, AMD’s client and gaming segment — serving consumers, gamers and corporate users — reported revenue of $3.61 billion, up 23% from a year earlier.
The segment includes the company’s Ryzen processors and Radeon graphics cards.
However, AMD warned that the business could face future pressure from rising memory and component costs.
AI investment boom continues despite mixed industry signals
AMD’s earnings report arrives amid mixed signals surrounding the broader AI sector.
Major technology groups and hyperscalers including Alphabet, Microsoft and Meta recently reported strong quarterly results and reaffirmed or increased spending plans aimed at expanding AI infrastructure.
At the same time, investor sentiment was tempered by reports that OpenAI had failed to meet internal targets for revenue growth and user expansion.
Advanced Micro Devices stock price