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Advanced Micro Devices Inc. (NASDAQ:AMD) expects its artificial intelligence business to deliver even stronger growth in 2027, with CEO Lisa Su signaling accelerating demand for the company’s data center chips as customers expand their AI infrastructure investments.

The bullish outlook comes as Wall Street sees little evidence of a slowdown in data center spending, with Wedbush analyst Matt Bryson maintaining an ‘Outperform’ rating and a $600 price target on AMD.

Su Sees Data Center AI Revenue Growing More Than 2X

Su expects AMD’s Data Center AI business to grow significantly more than double in 2027, building on an already strong ramp in demand for its Instinct GPUs and Helios rack-scale systems.

Speaking during the company’s third-quarter (Q3) earnings call, Su said customer deployment plans had expanded since AMD last updated its outlook, giving the company greater visibility into next year’s growth.

“We now expect server revenue to double year over year in 2027 and Data Center AI revenue to grow even faster than we projected 90 days ago,” Su said.

The CEO added that AMD expects its Data Center business to account for more than 80% of total company revenue in 2027, making it the primary driver of revenue and earnings growth.

The momentum is already becoming visible. AMD expects its Data Center AI business to surpass its server CPU business in revenue in the fourth quarter (Q4), marking a significant milestone as its MI450 GPU and Helios rack deployments accelerate.

Su also acknowledged that demand is running ahead of available supply.

“It is true that demand is higher than supply,” she said, adding that AMD is working with supply chain partners to increase capacity.

Wedbush Analyst Backs $600 AMD Price Target

Bryson echoed the optimism around AMD’s data center business in an appearance on CNBC, saying he sees no signs of weakness across the broader semiconductor supply chain.

“We’ve heard from companies last week, we heard from Supermicro today, AMD as well. That data center spend is really strong,” Bryson said.

"From a component supply chain perspective, I’m just not seeing any weakness."

The analyst pointed to AMD’s stronger revenue outlook, expected growth of 80% next year and plans for EPYC server CPU sales to double as evidence of broad-based demand.

He also argued that AMD’s growth trajectory supports a premium valuation, saying he was comfortable with a 30-times earnings multiple if the company is growing at 80%.

"I pushed AMD up to 40 times,” Bryson said, while cautioning that valuations above that level become harder to defend.

Bryson also highlighted the broader demand for computing infrastructure, noting that companies across the AI ecosystem continue to need more processing capacity.

“Everyone needs compute,” he said.

AMD’s Q3 At A Glance

AMD reported record third-quarter revenue of $13.4 billion, up 45% year-over-year, as its Data Center business nearly doubled on strong demand for EPYC server processors and Instinct AI GPUs.

Data Center revenue surged 97% year-over-year to a record $8.5 billion, accounting for approximately 64% of total revenue, compared with 47% a year earlier. The segment’s operating income jumped 168% to $2.9 billion.

AMD reported earnings of $2.09 per share during the quarter, up 74% year-over-year, while gross margin expanded to 56% from 54% a year earlier.

Wall Street expected AMD to report earnings of $1.89 on revenue of $13.1 billion, according to Benzinga Pro data.

Looking ahead, AMD expects fourth-quarter revenue of approximately $17 billion, plus or minus 3%. The midpoint represents year-over-year growth of approximately 66% and sequential growth of 27%. Non-GAAP gross margin is expected to be approximately 55%.

Price Action: AMD shares were up 7.33% to $519.39 in overnight trading at the time of writing. AMD stock closed 3.65% higher in Tuesday’s regular trading session at $483.9.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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