Key Points
AMD (NASDAQ: AMD) stock has had a great run in 2026, rising by around 120% so far. But that information doesn’t do investors much good in retrospect. What matters more is where the stock is heading from here, and how fast.
With how rapidly the AI build-out is progressing, many investors are looking to find stocks in this sector that have the potential to double in a year or two. So, could AMD double in just under two and a half years, by the end of 2028?
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AMD’s recent results have given investors hope
Early in the AI arms race, AMD got crushed by its rival in the graphics processor unit (GPU) space, Nvidia (NASDAQ: NVDA). Nvidia already had the majority of the GPU market, and it took a massive early lead in AI data centers. It has yet to give up much of that dominant position. However, AMD has done well in recent quarters, and its growth rate is beginning to accelerate.
In Q2, AMD’s growth rate rose to 50%, its fastest in nearly five years.
AMD Revenue (Quarterly YoY Growth) data by YCharts.
Its data center division drove that revenue growth, with revenue rising 107% year over year. However, there is a large asterisk next to that figure. During the second quarter of 2025, President Donald Trump halted all AI chip exports to China. In July 2025, Trump reversed course and lifted that export ban, but it still caused a temporary drop in AMD’s revenue, so its revenue growth this year was artificially boosted. We’ll have to see what Q3’s revenue growth looks like to get a better idea of where the business stands, but AMD has made some deals with major AI companies to supply computing hardware, so not all of its sales gains are coming in relation to that temporary headwind.
Late last year, AMD laid out its plan to deliver compound annual growth of 35% over the next three to five years, based on the expectation of its data center sales growing at an 80% compound annual rate over that time frame. AMD exceeded that pace last quarter, but that’s no guarantee that it can sustain these growth rates.
If it hits those goals, it could be a great investment to own from here. However, a lot of anticipated growth is already baked into the stock price.
AMD’s stock is far from cheap
AMD trades for a lofty 120 times earnings. When you compare it to its larger peer, Nvidia, which only trades for about 30 times earnings, it looks incredibly expensive.
AMD PE Ratio data by YCharts
Nvidia is growing faster than AMD, so this mismatch doesn’t make a ton of sense. Over the long term, these two should likely trade at similar valuations. So, setting a long-term price-to-earnings (P/E) ratio target of 30 for AMD makes sense.
Over the long term, management projects AMD will achieve a non-GAAP (adjusted) operating margin of at least 35%. If it has to pay about a 20% tax rate on those operating profits, that reduces its maximum profit margin to 28%. If AMD can achieve a 35% compound annual growth rate from now until 2028, that would result in revenue of $87.5 billion and profits of $24.5 billion. At a 30 times earnings valuation, that would give AMD a market cap of $735 billion.
The problem with that? AMD’s current market cap is $768 billion. So, if AMD does exactly what it says it will do and the market assigns a multiple to the stock that is more in line with where the industry leader trades, AMD’s stock will actually fall from here.
That shows how much optimism is already baked into AMD’s stock price. As a result, I think investors should steer clear, because if you put $10,000 into AMD shares today, by the end of 2028, your position may be worth less than that.
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Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.
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