AMD Just Raised Its Long-Term Growth Ceiling. Here's Why Analysts Are Bullish on AMD Stock.

Advanced Micro Devices (AMD) recently delivered stronger-than-expected second-quarter results, driven by solid AI-led demand for its CPUs and GPUs. Although AMD stock came under pressure following the earnings release, the company's updated long-term outlook suggests its AI-driven growth story is becoming even more compelling. This stronger guidance has led most Wall Street analysts to stay bullish on the stock.

At its Financial Analyst Day in November 2025, AMD laid out a three-to-five-year growth framework, targeting a revenue compound annual growth rate (CAGR) of more than 35% and adjusted EPS exceeding $20. However, management's latest commentary indicates that those targets may now prove conservative.

During the Q2 earnings call, management emphasized that the rapid adoption of AI is driving an unprecedented increase in demand for high-performance computing across every end market AMD serves. Moreover, the company is well-positioned to capitalize on the expanding opportunity.

AMD Points to Improving Outlook

Management stated that AMD is already tracking materially ahead of the long-term growth plan it presented last November. The company now expects revenue growth to be substantially above its previous growth target of more than 35% annually and believes it will significantly exceed its long-term annual EPS target of $20 within the same timeframe.

This revised outlook is notable because it signals that AI demand is accelerating faster than management had anticipated just months ago. AMD expects to outpace the broader AI and high-performance computing market, highlighting confidence in its expanding product portfolio and competitive position.

Earnings forecasts on Wall Street already point to sharp growth in profitability. Analysts expect AMD's EPS to surge 94% in fiscal 2026 to $6.34, followed by another 89% increase to approximately $11.96 in fiscal 2027. With management now indicating that its long-term EPS target of more than $20 is likely to be surpassed, the company appears positioned to sustain robust earnings growth well beyond 2027.

Data-Center Business to Keep Driving Growth

The strong momentum and expanding opportunities in AMD's data-center business support the outlook. In Q2, AMD delivered 50% year-over-year (YOY) revenue growth to $11.5 billion, with the data-center segment leading the way. Revenue from the division more than doubled to $6.7 billion, reflecting strong demand for EPYC server processors and Instinct AI accelerators.

The firm’s execution in the server market also remains impressive. AMD recorded its fifth consecutive quarter of record server CPU revenue, while both cloud and enterprise server sales grew more than 70% from the prior year, per CEO Lisa Su. Continued adoption of fifth-generation EPYC Turin and fourth-generation EPYC Genoa processors, along with broader deployments by hyperscale cloud providers, has enabled AMD to steadily gain x86 server market share.

Looking ahead, AMD's growth opportunity is much larger as generative AI moves from experimental projects to large-scale enterprise deployment. This transition is expected to significantly increase demand for both AI accelerators and high-performance server CPUs, positioning AMD to benefit from sustained AI infrastructure spending.

The company’s product roadmap further strengthens this outlook. Deployments of the Helios platform and MI450 Series Instinct accelerators are expected to accelerate in the second half of 2026, with an even stronger ramp in 2027. At the same time, improved supply conditions and robust customer demand are projected to drive server CPU revenue growth of more than 80% in the second half of 2026 and more than 70% in 2027. Consequently, management expects data-center revenue to more than double in 2027.

Importantly, this growth will also be highly profitable. A larger contribution from high-margin AI accelerators and server processors, coupled with higher average selling prices and operating leverage, will likely drive earnings growth faster than revenue growth.

Overall, AMD appears well-positioned to sustain strong revenue growth while delivering meaningful improvements in profitability over the coming years.

AMD Stock Still Has an Attractive Valuation

Even after its impressive rally over the past year, the valuation remains appealing.

AMD stock trades at a forward price-to-earnings (P/E) ratio of 82.6 times, which may seem expensive at first glance. However, with Wall Street projecting significant earnings growth through 2027 and management expecting annual EPS to exceed $20 within the next three to five years, the valuation appears justified and still leaves room for meaningful upside.

All told, Advanced Micro Devices appears set to deliver strong revenue and earnings growth led by continued strength in its data-center business. Further, its valuation remains attractive, helping explain why most Wall Street analysts continue to maintain a bullish stance.