In the AI race, Nvidia faces a challenge from AMD as demand shifts to full-stack computing solutions. AMD stock gained 85% in 2025, but is down 4% this year. With a $348 billion valuation, AMD’s Q4 revenue rose 34% to $10.3 billion, driven by EPYC server processors and Ryzen CPUs.

Hyperscaler demand for AMD instances remains high, with over 230 new instances launched last quarter. AMD anticipates continued high server demand as hyperscalers expand infrastructure for AI. The company expects data center revenue to grow more than 60% annually over the next three to five years, with AI revenue reaching billions by 2027.

AMD plans to release the MI500 series in 2027, aiming to boost AI performance. Client segment revenue rose 34% to $3.1 billion, with strong demand for Ryzen processors. Gaming revenue increased 50% to $843 million, supported by the Radeon RX 9000 series. AMD closed $17 billion in embedded design wins in 2025.

For the full year, AMD’s revenue grew 34% to $34.6 billion, driven by data center and client revenue growth. Gross margin reached 52%, and EPS rose 26% to $4.17. The company expects strong growth in 2026, driven by EPYC CPUs, Instinct deployments, and client share gains.

Analysts forecast AMD’s earnings to increase by 60% in 2026 and another 58% in 2027. With a forward earnings multiple of 37.9, AMD is positioned to capture growth across the AI compute stack. Analysts have shifted to a “Strong Buy” consensus on AMD stock, with a potential upside of 40% over the next 12 months.

Read more at Yahoo Finance: The Next Semiconductor Winner Might Not Be Nvidia