AMD Relies on a Rich Partner Base to Drive Sales: More Upside Ahead?

Advanced Micro Devices AMD is strengthening its position in the AI, cloud and data center markets by leveraging a rich partner base that expanded in the current quarter with the noteworthy additions of Celestica, Nutanix NTNX, Samsung and others. While AMD and Celestica are collaborating to bring the former’s new “Helios” rack-scale AI platform to market, Nutanix and AMD announced a multi-year strategic partnership to jointly develop an open, full-stack AI infrastructure platform designed to power agentic AI applications everywhere.

Celestica will undertake the research & development, design and manufacturing of scale-up networking switches in the AMD “Helios” rack-scale AI architecture, based on the Open Compute Project (OCP), Open-Rack-Wide (ORW) form-factor. Meanwhile, AMD is making a strategic investment of $150 million in Nutanix shares. AMD will also fund up to $100 million for Nutanix to support joint engineering initiatives and go-to-market collaboration to accelerate the adoption of AMD and the Nutanix-powered agentic AI platform everywhere.

Samsung and AMD are expanding their collaboration on next-generation AI memory and computing technologies. Samsung and AMD will align on primary HBM4 supply for the next-generation AI accelerator, Instinct MI455X GPU, as well as advanced DRAM solutions for 6th Gen EPYC CPUs, codenamed “Venice.” These technologies will support next-generation AI systems combining AMD’s Instinct GPUs, EPYC CPUs and rack-scale architectures such as the Helios platform. Samsung and AMD will also work together on high-performance DDR5 memory optimized for the 6th Gen EPYC CPUs.

An expanding partner base and a strong portfolio bode well for AMD’s prospects. The company’s data center AI business prospects are expected to accelerate with the upcoming MI450 series, which forms the crux of the 6-gigawatt (GWs) deal inked between AMD and Meta Platforms. Helios is gaining traction, as evident from AMD’s deals with OpenAI, HPE, Oracle and Lenovo.

Tough Competition Hurts AMD’s Data Center & AI Growth

AMD is suffering from stiff competition from the likes of Broadcom AVGO and NVIDIA NVDA. AMD currently expects revenues of $9.8 billion (+/-$300 million), which at the mid-point represents year-over-year growth of approximately 32% but a sequential decline of approximately 5%. The sequential revenue decline is attributed to a seasonal decline in Client and Gaming, and the Embedded segments.

NVIDIA is benefiting from the strong growth of AI and high-performance accelerated computing. The growing demand for generative AI and large language models using GPUs based on NVIDIA’s Hopper and Blackwell architectures is aiding data center revenues. In the fourth quarter of fiscal 2026, revenues from Data Center jumped 75% year over year and 22% sequentially to $62.31 billion. Data Center revenues accounted for 91.5% of NVDA’s revenues.

Broadcom continues to gain market share in AI networking, driven by strong adoption of Tomahawk 6 switch as well as Broadcom’s 200G SerDes, which are capturing demand from hyperscalers. Tomahawk 6 family switch series is now shipping in production volume. Broadcom’s Semiconductor solutions revenues jumped 52% year over year to $12.52 billion in the first quarter of fiscal 2026. Semiconductor revenues accounted for 64.8% of net revenues.

AMD’s Share Price Performance, Valuation & Estimates

AMD shares have dropped 4.3% on a year-to-date basis, outperforming the broader Zacks Computer and Technology sector’s drop of 4%.

AMD Stock’s Performance

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AMD stock is overvalued, with a forward 12-month price/sales of 6.89X compared with the broader sector’s 6.05X. AMD has a Value Score of D.

AMD Valuation

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The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at $1.27 per share, unchanged over the past 30 days, suggesting 32.3% growth from the figure reported in the year-ago quarter.

Advanced Micro Devices, Inc. Price and Consensus

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AMD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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