Advanced Micro Devices (NASDAQ:AMD) has started the year in positive territory, with its shares up about 10% even after factoring in last Friday’s 6% drop. Coming on the heels of a rally that has seen the stock nearly double over the past year, the move suggests that the lingering narrative of AMD playing second fiddle to Nvidia is starting to fade into the background.
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In early November, AMD CEO Dr. Lisa Su unveiled ambitious growth expectations of a 35% CAGR over the next 3 to 5 years. That outlook is supported by AMD’s performance roadmap, which points to continued technological progress. The company recently unveiled its latest Ryzen AI 400 and PRO 400 Series processors at CES 2026, while its Instinct MI450 Series GPUs are expected to launch in Q3 2026, with the MI500 Series slated for 2027.
The growing appetite for the company’s advancing technological wares is one reason that top investor Keith Noonan believes that things could get even better for AMD in the years to come.
“The stock could prove to be very cheap at today’s prices if demand for the company’s AI processors continues to accelerate,” says Noonan, who is among the top 3% of stock pros covered by TipRanks.
While Noonan doesn’t expect AMD to directly compete with Nvidia’s state-of-the-art GPUs, he also doesn’t think this is all that necessary. The investor explains that “hardware that’s less than bleeding-edge” can be very efficient in running AI models.
Moreover, the hyperscalers are looking to diversify beyond Nvidia, especially when it comes to inference applications, and AMD offers a “quick and easy” option. As evidence, Noonan cites the fact that even heavy users of Nvidia’s processors, such as OpenAI, are starting to work with AMD.
“AMD stock probably won’t surpass or catch up to Nvidia when it comes to ultra-high-end GPU performance this year, but it doesn’t need to accomplish those feats in order to post big wins in the AI space,” adds Noonan.
While the company’s valuation of 36x expected earnings certainly implies a fair amount of future growth, Noonan argues that AMD has the potential to deliver significant value in the years ahead. If things play out as the investor expects, AMD could be in “deep-value territory.”
“With the potential for AMD’s AI infrastructure deals to start showing up as sales and lifting margins in the near future, the market’s sales and earnings outlook for the stock could quickly be revised upwards,” Noonan concludes. (To watch Noonan’s track record, click here)
Wall Street, for its part, isn’t bracing for a slowdown either. Of the analysts covering AMD, 25 rate the stock a Buy while 8 sit on the fence, giving AMD a Strong Buy consensus rating. The Street’s average 12-month price target of $286.66 implies 21% upside from current levels. (See AMD stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.