AMD trades at 71.3x expected earnings, dropping to 29.6x by 2028—a 58% discount—if its projected 42.7% revenue CAGR from server CPU TAM growth above 35% and Q2 revenue growth over 70% materializes. AMD shares fell after OpenAI delayed its IPO to 2027, stoking concerns about near-term AI infrastructure spending.
AMD currently trades at 71.3 times this year’s expected earnings, but management projects a 42.7% revenue compound annual growth rate driven by a structural shift in server CPU demand for agentic AI. They forecast the total addressable market for server processors to grow over 35% annually, underpinning guidance for more than 70% year-over-year server CPU revenue growth in the second quarter.
Shares of AMD and other AI chip suppliers slid after OpenAI signaled it might postpone its IPO to 2027, raising concerns over near-term data center commitments and slowing chip orders. Since OpenAI represents significant computing capacity contracts, the delay could temper infrastructure spending in the coming quarters.
Analysts' 2028 EPS estimates for AMD range from $12.61 to $31.03 per share, reflecting wide uncertainty about the company’s aggressive growth path. Key risks include slower AI adoption, intensified competition, and volatility inherent in stocks priced for high future growth.
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