Should You Buy Advanced Micro Devices (AMD) Stock After Its 12-Month Return of 200%?

Advanced Micro Devices (AMD -1.21%) is one of the world’s leading suppliers of graphics processing units (GPUs) for data centers, which are the primary chips used in artificial intelligence (AI) training and inference workloads. In fact, it has become one of the most formidable competitors to the industry leader, Nvidia.

On Aug. 4, AMD released its operating results for the 2026 second quarter, and they revealed substantial revenue and earnings growth led by its data center business. But considering its stock is up 200% during the past 12 months, is most of that growth already priced in? The answer might depend on how long an investor plans to hold the stock, and I’ll explain why.

AMD is starting to ship its most powerful chips ever

AMD was on the back foot when it entered the AI data center race in 2023. Its MI300X GPU was designed to compete with Nvidia’s industry-leading H100, but that company was already in the process of launching its Blackwell architecture, which extended its dominance.

AMD is closing the gap, though, and it has since captured some of Nvidia’s top customers, including Oracle, Microsoft, and OpenAI. AMD’s new MI450 series GPUs are widely expected to be a comparable alternative to Nvidia’s new Vera Rubin chips when they start shipping during the next few months, which should significantly increase the company’s market share.

In fact, when the MI450 is paired with AMD’s new Helios rack, which includes specialized central processing units (CPUs) and networking components, it can be as much as 15% more powerful and 30% more cost-efficient than any of its competition.

The company is already working on its MI500 series GPUs, which are expected to reach customers in 2027. Chief Executive Officer Lisa Su said it could produce a staggering 2,000 times more performance in inference workloads compared to the original MI300X, which highlights the company’s rapid progress during the past four years.

OpenAI and Meta Platforms will each deploy 6 gigawatts’ worth of computing capacity using AMD’s GPUs during the next few years, starting with the MI450 and Helios. Su says Anthropic and Microsoft will also be deploying MI450 GPUs in Helios racks, so AMD is amassing a very impressive customer list.

AMD’s data center revenue doubled during the second quarter

AMD generated a record $11.5 billion of revenue during the second quarter, a 50% increase from the year-ago period. The company’s data center business contributed more than half of that total with $6.7 billion in revenue, and it grew by a whopping 107%.

But considering Su predicts the market for AI data center chips will grow to $1.4 trillion annually by 2030, AMD has barely scratched the surface of its opportunity. She now expects the company’s data center revenue to continue to more than double in 2027, which is positive news for shareholders.

There is currently a shortage of AI data center hardware because of the incredible level of demand, which gives suppliers like AMD the ability to dictate prices. This is having a profound affect on the company’s bottom line, with its second-quarter adjusted (meaning not in accordance with generally accepted accounting principles) earnings soaring by 246% to $1.66 per share.

Is it too late to buy AMD stock after its recent gains?

Based on AMD’s adjusted trailing-12-month earnings of $5.76 per share, its stock is trading at a price-to-earnings (P/E) ratio of 83.6, which is more than double Nvidia’s P/E of about 33.5. Therefore, AMD stock certainly looks expensive after its 12-month rally of 200%.

Nevertheless, Wall Street’s average forecast (provided by Yahoo! Finance) suggests AMD’s adjusted earnings could rise to $13.92 per share in 2027, giving its stock a forward P/E of just 34.6. That means the stock might actually look attractive at the current price to investors who intend to hold it for at least the next 18 months. And if Su is right about the market for AI data center chips growing to $1.4 trillion annually by 2030, then AMD stock might actually be cheap today.

As a result, whether AMD stock is a good buy after its recent rapid gains might depend entirely on an investor’s time horizon. Those who are looking for strong returns during the next few months should probably steer clear, whereas those who are willing to stay the course for several years could do very well, as long as the AI infrastructure spending boom continues.