AMD's 1.9% Premarket Surge: A Strategic Entry Point for Growth Investors?

The semiconductor sector is undergoing a seismic shift in 2025, driven by the explosive growth of artificial intelligence (AI) and high-performance computing (HPC). According to a Yole Group report, the global data center semiconductor market is projected to expand from $209 billion in 2024 to $492 billion by 2030, with GPUs and AI-specific chips leading the charge. Advanced Micro Devices (AMD) has emerged as a pivotal player in this transformation, leveraging strategic partnerships, product innovation, and a robust financial performance to challenge industry leader NVIDIA. The recent 1.9% premarket surge in AMD shares on September 28, 2025, has sparked renewed interest among growth investors. This article evaluates whether this surge aligns with a strategic entry point, analyzing AMD's positioning in the AI/HPC markets, valuation metrics, and technical indicators.

Semiconductor Sector Momentum: AI and HPC as Growth Engines

The AI and HPC markets are reshaping compute and memory technologies, with GPUs remaining central to this evolution. By 2030, GPU revenue is forecasted to nearly double to $215 billion, while AI ASICs are expected to reach $85 billion, as noted in the Yole Group report. NVIDIA currently dominates this space, capturing 93% of server GPU revenue in 2024, according to the same analysis. However, AMD's aggressive expansion in AI infrastructure-bolstered by partnerships with OpenAI, Microsoft, and telecom giants like KDDI and Nokia-has positioned it as a credible alternative.

AMD's Q1 2025 results underscore its momentum: data center revenue surged 57% year-over-year to $3.67 billion, with overall revenue hitting $7.4 billion, a 36% increase, according to a Monexa analysis. The company's product roadmap, including the MI400 and MI500 Instinct GPU series, is designed to close the performance gap with NVIDIA while emphasizing cost-effectiveness and energy efficiency. Additionally, AMD's open-source ROCm platform is gaining traction as a CUDA alternative, fostering developer adoption (Monexa also highlights ROCm's growing ecosystem).

Catalyst for the 1.9% Premarket Surge

The premarket surge on September 28, 2025, was catalyzed by a bullish analyst upgrade from Melius Research. Analyst Ben Reitzes upgraded AMD from "hold" to "buy" and raised the price target to $175 from $110, citing the company's competitive AI systems and strategic collaborations, as reported in a TalkMarkets article. This upgrade followed AMD's showcase of AI data center systems that demonstrated price-performance advantages over rivals.

Simultaneously, AMD's multi-generational partnership with OpenAI, announced on October 6, 2025, further solidified its AI credentials. The deal involves deploying 6 gigawatts of AMD Instinct GPUs, with an initial 1 gigawatt of MI450 GPUs scheduled for late 2026, according to a FinancialContent article. This partnership not only validates AMD's technology but also locks in long-term revenue streams, potentially generating tens of billions annually.

Valuation and Technical Analysis: A Mixed Picture

AMD's valuation metrics present a nuanced picture. As of September 2025, the company's trailing P/E ratio stands at 90.07, while its forward P/E is 42.02, per StockAnalysis statistics. The PEG ratio, a critical metric for growth stocks, varies across sources. FinanceCharts PEG reports a PEG ratio of 0.81, suggesting AMD is undervalued relative to its 108.43% earnings growth over the past 12 months. However, GuruFocus PEG calculates a PEG ratio of 1.46 using a 5-year EBITDA growth rate, indicating potential overvaluation. This discrepancy highlights the importance of context: short-term earnings growth versus long-term sustainability.

Technically, AMD's 14-day RSI is reported between 41.97 (oversold) and 71.065 (overbought), reflecting divergent signals, according to Investing.com technicals. The stock is above its 200-day moving average, a positive sign for long-term holders, and recently broke through a prior resistance level, noted in an ABG Analytics report. These mixed signals suggest volatility but also underscore strong underlying demand.

Strategic Entry Point: Balancing Fundamentals and Risks

For growth investors, AMD's 1.9% premarket surge aligns with a strategic entry point if the following factors are considered:
1. Sector Tailwinds: The AI/HPC markets are structurally expanding, with AMD well-positioned to capture market share through innovation and partnerships.
2. Valuation Flexibility: A PEG ratio below 1 (0.81) from FinanceCharts suggests undervaluation relative to short-term growth, though long-term risks remain.
3. Technical Momentum: While RSI readings are conflicting, the stock's break above key resistance levels and strong earnings growth justify a bullish bias.

However, investors must remain cautious. NVIDIA's dominance in AI GPUs (93% market share in 2024) and TSMC's CoWoS packaging advantage for NVIDIA's Blackwell chips pose significant challenges, as highlighted by the Yole Group report. AMD's success hinges on executing its product roadmap and maintaining cost efficiency.

Conclusion

AMD's 1.9% premarket surge on September 28, 2025, reflects growing confidence in its AI/HPC strategy and financial performance. While valuation and technical indicators present mixed signals, the semiconductor sector's long-term growth trajectory and AMD's competitive positioning make it an attractive candidate for growth investors. However, due diligence is required to navigate the risks of a highly competitive market. For those with a medium-term horizon, the current valuation and sector momentum suggest a strategic entry point, provided AMD continues to deliver on its innovation and partnership promises.