AMD Surges 12% After Earnings Beat as AI Chip Demand Drives Record Data Center Revenue

Key facts

• Q1 EPS of $1.37 adjusted, beating the $1.29 consensus.
• Revenue reached $10.25 billion, up 38% year-over-year, above the $9.89 billion expected.
• Data center sales surged 57% to $5.8 billion, driven by AI chip demand.
• Q2 revenue guidance of $11.2 billion exceeded the $10.52 billion consensus.
• Net income rose to $1.38 billion from $709 million a year earlier.
• Stock jumped about 12% in extended trading after the report.
• HSBC downgraded AMD to 'hold' citing valuation concerns after a 255% one-year gain.
• CEO Lisa Su expressed 'strong and increasing confidence' in reaching tens of billions in data center AI revenue next year.

Earnings Beat Ignites Rally

first-quarter earnings Tuesday that surpassed Wall Street expectations, sending shares up roughly 12% in extended trading. The chipmaker posted adjusted earnings per share of $1.37 on revenue of $10.25 billion, compared with analyst forecasts of $1.29 and $9.89 billion, respectively. Revenue climbed 38% from $7.44 billion a year ago, fueled by a 57% jump in data center sales to $5.8 billion. Net income more than doubled to $1.38 billion, or 84 cents per share, from $709 million, or 44 cents per share, in the same period last year.

AI Boom Drives Data Center Growth

The data center unit has become the "primary driver of our revenue and earnings growth," CEO Lisa Su said in a statement. The segment's performance reflects soaring demand for chips that power artificial intelligence workloads, a market where AMD trails rival Nvidia but has gained ground. In prepared remarks ahead of the earnings call, Su said the company has "strong and increasing confidence" in its ability to reach tens of billions of dollars in data center AI revenue next year and to exceed its long-term growth target of greater than 80% in the coming years.

Optimistic Outlook for Second Quarter

For the second quarter, AMD forecast revenue of approximately $11.2 billion, beating the $10.52 billion consensus estimate compiled by LSEG. The guidance underscores management's belief that demand for AI chips will continue to accelerate. "Looking ahead, we expect server growth to accelerate meaningfully as we scale supply to meet demand," Su said. The company is ramping production to capture a larger share of the AI chip market, which has been dominated by Nvidia's graphics processing units.

Stock Surge Meets Valuation Concerns

AMD's stock has more than tripled over the past year, including a 66% gain so far in 2026, as investors bet that the artificial intelligence boom is just getting started. However, HSBC recently downgraded the stock to a hold rating, citing valuation concerns after the 255% one-year explosion. The downgrade reflects a view that the stock's price may have run ahead of fundamentals, even as the company delivers strong earnings. Jim Cramer, the host of CNBC's Mad Money, defended AMD after the downgrade, asserting that "this stock is going to go up much more."

AI Chip Market: Room for Multiple Players

While AMD has trailed Nvidia in the market for GPUs used in AI data centers, investors have poured into AMD's stock more recently on optimism that the opportunity is large enough for multiple players. The company's data center AI revenue is expected to grow substantially, with Su targeting tens of billions of dollars next year. The broader chip industry is closely watching AMD's trajectory as it seeks to challenge Nvidia's dominance. The first-quarter results suggest that AMD is successfully capturing a portion of the AI spending wave, though it still faces significant competitive and supply-chain hurdles.

What Comes Next: Execution and Supply

AMD's ability to meet its ambitious revenue targets hinges on scaling supply to match surging demand. Su emphasized that server growth will accelerate as the company ramps production, but execution risks remain. Investors will be watching for updates on AMD's product roadmap and customer wins in the AI space. The company's guidance for the second quarter provides a near-term confidence boost, but the longer-term outlook depends on sustaining momentum against Nvidia's entrenched position.

Analysts Divided on Stock's Trajectory

The divergence between HSBC's downgrade and Cramer's bullish defense highlights the uncertainty surrounding AMD's valuation. The stock's 255% one-year surge has made it a battleground for bulls and bears. For now, the earnings beat and strong guidance have reinforced optimism that AMD's AI story has room to run. Whether the stock can maintain its upward trajectory will depend on continued execution and the broader health of the AI chip market.

The bottom line

• AMD beat Q1 earnings and revenue estimates, with data center sales up 57% to $5.8 billion.
• Q2 revenue guidance of $11.2 billion exceeded consensus, signaling sustained AI chip demand.
• CEO Lisa Su expressed confidence in reaching tens of billions in data center AI revenue next year.
• Stock surged 12% after hours, but HSBC downgraded to hold on valuation after a 255% yearly gain.
• AMD trails Nvidia in AI GPUs but is gaining traction as the market expands.
• Investor sentiment remains divided between growth optimism and valuation concerns.