AMD Stock is Outperforming. Should You Buy the Breakout?

Semiconductor stock Advanced Micro Devices (AMD) has suddenly emerged as a serious outperformer, with AMD up 30% over the past month, compared to a roughly 13% gain for the broader S&P 500 Index ($SPX). Investors have reacted positively to a few positive strategic developments for AMD, including the announcement of a $10 billion partnership with Saudi Arabian HUMAIN.

More recently, AMD announced the $3 billion sale of ZT Systems' manufacturing business to Sanmina while retaining a crucial 1,200-person engineering team. This strategic divestment demonstrates AMD's commitment to streamlining operations while maintaining its competitive edge in the artificial intelligence (AI) market through preserved engineering capabilities. 

AMD Leans Into AI Data Center Strength

AMD’s overall financial performance remains robust, with 36% year-over-year revenue growth to $7.4 billion in Q1 2025. The company's diversified product portfolio, including Instinct AI accelerators and EPYC processors, continues to drive growth in both consumer and enterprise segments. 

But the data center segment has emerged as a particular bright spot for AMD, with Q1 revenue reaching an impressive $3.7 billion, representing a 57% year-over-year increase. AMD's strategic positioning in the AI infrastructure market has been further strengthened through partnerships with major cloud providers and the retention of ZT's engineering expertise. 

The upcoming launch of MI350x chips and the strategic partnership with Sanmina as the preferred manufacturing partner for cloud and AI solutions demonstrate AMD's commitment to maintaining its competitive position in the rapidly evolving AI market. Coupled with an expanded share buyback program totaling $10 billion, the recent strategic push into AI has significantly boosted investor confidence. 

Is Now a Good Time to Buy AMD Stock?

Wall Street analysts maintain a “Moderate Buy” consensus rating on AMD, with an average price target of $129.32. That said, forecasts vary significantly, with Citi maintaining a more conservative $100 target. 

Despite trading at a forward price/earnings (P/E) of 29, which exceeds the S&P 500 average of 20, AMD's expanding AI capabilities and strategic initiatives suggest the potential for sustained growth. 

In the near term, however, AMD is working its way out of overbought territory - and the company faces some challenges, particularly regarding China export restrictions that could impact revenues by approximately $700 million in Q2 2025. 

This article was generated with the support of AI and reviewed by an editor. On the date of publication, the editor had a position in: AMD . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.