AMD shares rise on stronger 2027 growth outlook for AI data-center business

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AMD shares rise on AI growth

Highlights

AMD shares rise 7.3% in premarket after forecasting over 80% revenue growth by 2027, exceeding LSEG’s 77% analyst estimate.
AMD's third-quarter data-center revenue surged 97% to $8.55 billion, beating the $8.20 billion forecast as AI infrastructure demand accelerates.
TD Cowen analysts highlight AMD's strengthened position as Nvidia's main competitor in AI with an expanding product roadmap, while Morgan Stanley cites continued market share gains.

Growth forecast points to wider AI spending

As reported by Reuters, Advanced Micro Devices rises 7.3% in premarket trading after forecasting faster growth through 2027 and indicating continued strength in AI infrastructure demand.

The company says overall revenue is expected to rise more than 80% in 2027, above the 77% growth analysts estimate, according to LSEG data. CEO Lisa Su says demand is visible across the data-center business, including both CPUs and data-center AI products, and adds that AMD has been preparing for that expansion for several years.

AMD's outlook also underscores momentum in its server processor business, suggesting enterprise and cloud spending on AI computing is extending beyond Nvidia's accelerator franchise, which still dominates the market. The company, which recently joined the ranks of trillion-dollar companies, has gained about 126% this year and is positioned to add roughly $58 billion in market value if the premarket move holds.

Competitive positioning strengthens in semiconductors

Analysts at TD Cowen say AMD's product roadmap and expanding software ecosystem leave it well placed to capture a meaningful share of the AI market. They also say that position strengthens AMD's role as the leading alternative to Nvidia while supporting further gains in server CPUs.

Morgan Stanley analysts are more cautious about assuming current growth in the CPU server business continues indefinitely amid an industry-wide shortage. Even so, they say AMD is executing better than competitors and could keep taking market share.

The latest quarterly figures add support to that view. AMD's third-quarter data-center revenue jumps 97% to $8.55 billion, beating analysts' expectation of $8.20 billion, while rival Intel's shares fell more than 20% last week after weak PC demand renewed concern about its reliance on that market and its more limited exposure to AI.

Our earlier coverage of the U.S. AI data-center buildout explained that rapid expansion is increasingly running into practical limits, including rising financing costs, construction delays, and power constraints. We noted that a large share of proposed projects may not be realistic on current timelines, putting investor confidence at risk even as underlying AI demand remains strong.

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