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Advanced Micro Devices (AMD) shares rose 7.3% in premarket trading on Wednesday, November 4, after the chipmaker projected stronger revenue growth for 2027. The forecast reflects rising demand for artificial intelligence (AI) infrastructure and data center processors.
AMD expects its overall revenue to grow by more than 80% in 2027. This is higher than the 77% growth forecast by analysts, according to LSEG data. The outlook has strengthened investor confidence in the company's efforts to compete with Nvidia in the AI chip market. Chief Executive Lisa Su said demand was growing across the company's data center and processor businesses.
"We see demand across the data-center business, across our CPU business, as well as our data-center AI business," Su said. She added that AMD had spent several years preparing for this growth.
The company has gained around 126% in market value this year. If the premarket gains hold, its market capitalization could increase by approximately USD 58 billion. AMD's product development plans and expanding software ecosystem could also help it win a larger share of the AI market, according to analysts at TD Cowen.
AMD's third-quarter data center revenue increased 97% to USD 8.55 billion. This was higher than analysts' estimate of USD 8.20 billion. The growth highlights the increasing demand for server processors and AI computing products. It also suggests that spending on AI infrastructure is creating opportunities beyond Nvidia's graphics processors.
AMD's gains come as rival Intel faces pressure in its traditional PC business. Intel shares dropped more than 20% last week after the company reported weaker PC demand. However, analysts at Morgan Stanley have warned that server processor growth could face challenges from an industry-wide shortage. They still believe AMD is performing well against competitors and could continue gaining market share. AMD currently trades at around 31 times its expected earnings. Nvidia trades at 14 times, while Broadcom stands at 16.5 times.
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