AMD shares rise as AI-driven data-center strength fuels growth outlook

Nov 4 (Reuters) - Advanced Micro ‌Devices rose 3% ​in ​early trading after the US chipmaker forecast faster growth through 2027, reassuring investors that demand for AI infrastructure remains ‌strong.

The company's strong outlook highlighted growing momentum in its server ⁠processor business, signaling that spending on AI computing was extending beyond Nvidia's accelerators, which ‌dominate the market.

"We see demand ‌across the data-center business, across our CPU business, as well as our data-center AI business," CEO Lisa Su said, adding the company ​had been preparing for that growth for several years.

Su said on Tuesday that the company expects overall revenue to rise more ⁠than 80% in 2027, which is higher than the 77% growth analysts estimate, according to LSEG ​data.

AMD's product roadmap and expanding software ecosystem position it to capture a meaningful share of the AI market, while ​strengthening its role as the leading ‌alternative to Nvidia and supporting further gains in server CPUs, said analysts at TD Cowen.

Last week, rival Intel's shares ⁠plunged more than 20% after the company reported weak PC demand, fueling concerns about its reliance on the PC market and relatively limited exposure to ⁠AI.AMD, which recently joined the ranks of trillion-dollar companies, has gained about 126% this ​year.

Analysts at Morgan Stanley are cautious about assuming current growth in the CPU server business will continue indefinitely amid an industry-wide shortage, but they believe AMD ‌is executing better than competitors and could continue to capture a larger share of the market.

The company's third-quarter ‌data-center revenue jumped 97% to $8.55 billion, topping analysts' expectations of $8.20 billion.

The Santa ⁠Clara, California-based company trades at ‌about 31 times forward ​earnings, compared with 14 times for Nvidia and 16.5 times for Broadcom.

(Reporting by Kanishka Ajmera in Bengaluru; Editing by ‌Shinjini Ganguli)

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