AMD Stock Popped Today: Is It a Buy?

Shares of Advanced Micro Devices (AMD 4.36%) were flying higher today, sparking a broad recovery in the chip sector as AMD reported soaring demand in its data center and client, or PC-based, segments.

While overall revenue growth was dragged down by weaker performance, investors focused on the strength in the data center segment, which reflects the growing demand for GPUs and related components to run new AI models.

AMD is making progress

Investors had been waiting for AMD to capitalize on the opportunity in the data center GPU market currently dominated by Nvidia, and the company seems to be doing just that.

Data center revenue jumped 115% to $2.8 billion, driven by the new Instinct Mi300 GPUs as the new accelerator recorded just over $1 billion in sales in the quarter.

This data center revenue made up nearly half of the company’s total revenue, and the growth shows the company staking its claim in the AI boom, something investors have long expected, as the stock soared last year before a more recent pullback.

Is AMD stock a buy now?

AMD stock is still expensive, as investors are pricing in future growth from AI, but the recent round of results show that AMD is capable of capitalizing on the opportunity in AI.

Additionally, overall revenue growth should pick up as its gaming and embedded segments will stabilize and more of its business will shift to the data center segment, as has happened to Nvidia.

It’s still early in the AI revolution, and AMD looks poised to benefit. Buying the stock now looks like a smart move.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.