The artificial intelligence (AI) infrastructure boom has driven a significant rally in several U.S. stocks, and one of the top performers is Advanced Micro Devices (NASDAQ: AMD). The company is benefitting from solid AI-driven demand for its graphics processing units (GPUs). At the same time, the rise of Agentic AI is driving greater demand for high-performance server central processing units (CPUs), further strengthening AMD’s growth prospects.
Supported by strong fundamentals, favourable market conditions, and a solid product lineup, AMD appears well-positioned to deliver substantial long-term growth, making it a top-performing U.S. stock that Canadian investors should own.
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AMD posted solid Q1 earnings
AMD reported a strong first quarter (Q1), with revenue and earnings rising sharply due to growing demand for its products and improved operating efficiency. The company generated US$10.3 billion in revenue in Q1, a 38% increase from the same period last year. This growth was driven by strong performance in the Data Center segment, continued momentum in Client and Gaming, and a recovery in the Embedded business.
The Data Center segment remained the largest growth driver, with revenue rising 57% year over year to US$5.8 billion. Demand for AMD’s EPYC CPUs remained robust, while Instinct GPUs continued to see wider adoption. The company’s AI-related data center revenue also posted significant double-digit growth as more cloud providers, enterprises, and sovereign customers increased deployment of Instinct accelerators.
Within the Data Center business, server revenue rose by more than 50% year over year, supported by strong sales to both cloud and enterprise customers. AMD also gained additional market share as adoption of its fifth-generation EPYC Turin CPUs accelerated, alongside sustained demand for its fourth-generation EPYC processors.
The Client and Gaming segment also delivered healthy growth, with revenue up 23% year over year.
AMD’s profitability improved significantly. Gross margin expanded to 55%, up 170 basis points from the previous year, supported by a favourable product mix and a larger contribution from high-margin data center products. Adjusted earnings per share (EPS) grew 43% year over year, reflecting strong revenue growth and operating leverage.
AMD’s growth is not slowing down
AMD’s growth trajectory remains strong, driven by accelerating demand for AI infrastructure. The company’s Data Center segment is expected to continue posting robust growth, supported by rising AI-related revenue and strong demand for its Instinct GPUs.
Management said demand for its upcoming MI450 series GPUs continues to strengthen, suggesting strong growth ahead. Further, AMD is projecting tens of billions of dollars in annual Data Center AI revenue by 2027.
The momentum is not limited to GPUs. AMD expects server CPU revenue to increase by more than 70% year over year in the second quarter, with strong growth likely to continue through the second half of 2026 and into 2027.
In addition, the company’s expanded strategic partnership with Meta is expected to further support future growth.
For the second quarter of 2026, AMD projects revenue of approximately $11.2 billion, representing year-over-year growth of about 46%. This guidance also points to a sequential acceleration in revenue growth. Adjusted gross margin is expected to reach roughly 56%, a significant improvement from 43% in the same quarter last year.
Overall, strong demand trends and a rapidly expanding market opportunity suggest that AMD is well-positioned to deliver solid earnings growth, making it a top stock to own.
