Advanced Micro Devices (AMD) saw its shares surge more than 6% on Tuesday after the company raised its long-term artificial intelligence market opportunity to $3 trillion by 2030, up from a prior estimate of roughly $2 trillion. The stock closed at $508.38, up 6.45%, extending its year-to-date gain to over 120%.
Chief Financial Officer Jean Hu, speaking at an investor conference, said the revised total addressable market reflects accelerating demand for graphics processing units (GPUs), central processing units (CPUs), and AI-enabled personal computers. In July, AMD had pegged the market at approximately $2 trillion. Hu emphasized that the AI investment cycle is still in its early stages, with strong demand expected to persist for AMD's product portfolio.
Inference becomes the primary AI workload
A key driver of AMD's optimism is the shift in AI computing from model training to inference—the process where trained models execute tasks. According to a Citi summary of the event, AMD management noted that over the past year, inference has become the majority driver of AI computing, with workloads expanding beyond chatbots into more autonomous systems.
This transition supports AMD's expectation that its data center business will more than double next year. The company plans to launch its next-generation MI450 GPU this quarter, with production ramping up in the fourth quarter and continuing into 2027. AMD is also benefiting from stronger server CPU demand, having increased supply in a constrained market. The company projects more than 80% growth in that segment during the second half of this year compared with the same period in 2025, and over 70% growth next year.
Helios systems and customer commitments
AMD's rack-scale Helios systems are seeing robust demand, with Meta Platforms and two unnamed AI labs serving as anchor customers. All three have provided demand forecasts above their initial purchase agreements. Helios volume expectations for 2027 have already surpassed initial projections, and AMD is seeing additional interest from newer "neo-cloud" providers.
While data center GPUs currently generate profit margins below AMD's corporate average, growth in higher-margin server and embedded businesses is helping offset that pressure. The company expects strong double-digit growth in these areas during the second and third quarters.
Looking ahead, AMD is developing its next-generation AI accelerator pipeline. Management said it is working with its three leading customers on MI500 and MI600 chips. The company has also disclosed a partnership with Cerebras and plans to target the low-latency inference market.
Risks and valuation concerns
Despite the positive outlook, AMD shares have pulled back nearly 5% over the past week and about 6% over the past month, following a strong run. Investors are weighing valuation against risks such as AI accelerator export controls, memory supply constraints, and tariffs. The Gaming segment remains a drag, with revenue down 31% year over year to $779 million.
Nevertheless, AMD has established itself as a credible second source for AI computing, supported by 107% year-over-year growth in Data Center revenue and a 6GW GPU agreement with OpenAI. The stock currently has five strong-buy ratings, 36 buys, and 10 holds, with no sell ratings and an average price target of $613.84.
For context, other AI-related names have also seen volatility. Nebius jumped 10% on a Palantir deal, while CoreWeave surged 16% on OpenAI's Astra model. Meanwhile, Qualcomm gained 4% after Amazon signed on for custom AI chips, and Oracle rose 4% on OpenAI launch and analyst optimism.
This article is for informational purposes only and does not constitute financial advice.
