Chaowei Semiconductor (AMD) shares hit record high. Should we buy now?

Highlights

Contents

Highlights

MI450 and Helios are key growth catalysts

EPYC is an undervalued source of AI revenue

Valuation is a major concern

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Advanced Micro Devices (AMD) reported that Sales in the first fiscal quarter of fiscal 2026 hit a record high of US$10.25 billion, a year-on-year increase of 38%.

Data center division revenue surged 57% to US$5.78 billion and now accounts for more than half of the company's total revenue.

Internal demand forecasts for the upcoming MI450 accelerator and Helios rack-level solution have exceeded expectations.

The current valuation is about 42 times the forward P/E ratio, significantly higher than the historical average.

The Wall Street Consensus rated the stock a "moderate buy" with a median price target of $458.92.

Advanced Micro Devices delivered an impressive start to 2026. Total sales reached an unprecedented $10.25 billion, a 38% increase from the same period last year. Adjusted earnings per share rose 43% to $1.37, while GAAP earnings nearly doubled to $1.38 billion.

The data center sector contributed most of the growth momentum. Revenue from the division rose 57% to $5.78 billion, driven by strong demand for EPYC server chips and the MI350 AI accelerator. Operating profit for the division expanded from $932 million to approximately $1.6 billion.

The client division grew 26%, the games division grew 11%, and the embedded division grew 6%. Each business line showed positive growth momentum.

MI450 and Helios are key growth catalysts

AMD is preparing to launch the MI450 accelerator and Helios, a comprehensive rack-level architecture. This integrated platform integrates AI accelerators, EPYC processors, network infrastructure and proprietary software into a unified solution.

Company leadership stated that customers 'early forecasts for MI450 and Helios have exceeded initial internal expectations. Major cloud infrastructure providers and AI development companies are actively looking for alternatives to Nvidia to manage expenses and reduce vendor concentration risks.

Advanced Micro Devices can build a significant revenue stream without becoming a market leader. The AI infrastructure space is expanding rapidly, and even if Nvidia maintains its dominant position, AMD can ensure significant market share.

The software ecosystem is the main challenge. Nvidia's CUDA framework has deep market penetration, while AMD's ROCm platform must demonstrate equal reliability in production-level deployments.

EPYC is an undervalued source of AI revenue

AMD's server processor product portfolio has received less attention in AI discussions, but it plays a vital role. AI infrastructure relies on the CPU for data orchestration, storage operations, and general computing tasks that supplement accelerator workloads. With the popularity of inferential computing and autonomous AI applications, the demand for high-performance server CPUs will increase proportionately.

Advanced Micro Devices now expects the server CPU market to grow at a rate of more than 35% per year by 2030. EPYC continues to seize market share from Intel with its excellent performance, energy efficiency and core density. This positioning allows AMD to benefit from investments in AI infrastructure, regardless of which accelerator vendor the customer chooses.

Valuation is a major concern

AMD shares soared to record levels after the release of the latest financial guidance. At a forward P/E ratio of about 42, the stock is trading well above its five-year historical average and almost twice Nvidia's forward P/E ratio during the comparable period-despite Nvidia's lead in AI accelerator market share.

This valuation premium requires AMD to perform well on the MI450, Helios and EPYC projects. Any release delays, weakening demand signals or slowing cloud infrastructure deployment could cause downward pressure.

According to 44 analysts monitored by MarketBeat, AMD's rating is "Moderate Buy." These include 2 "strong buy" suggestions, 28 "buy" suggestions, 13 "hold" suggestions, and 1 "sell" suggestion. Target prices range from $235 to $700, with an average of $458.92-a price that was already below AMD's market price at the time of release, indicating that the stock price is rising faster than analysts had predicted a correction.