Could This AI Stock Be the Top Performer of the New Year?

Advanced Micro Devices (NASDAQ: AMD) had a large tally successful 2025, with the banal jumping 77.3% during the year. Of course, with a marketplace headdress of lone astir $411 billion, AMD is obscurity adjacent Nvidia's (NASDAQ: NVDA) $4.65 trillion level (yet). That's really a bully happening for inventors.

Like Nvidia, AMD designs and markets machine chips, specified arsenic cardinal processing units (CPUs) and graphics cards/artificial quality (AI) accelerators. It has respective notable brands nether its umbrella, including the palmy Ryzen CPUs, the EPYC CPU, and the Instinct GPU lines for information centers and unreality servers.

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The immense request for its products to conscionable the increasing needs of companies moving with AI translated into accrued request for its banal successful 2025. However, that was past performance, and astir investors are much funny successful aboriginal performance. Does AMD person what it takes to stay a apical AI performer successful 2026? Let's cheque the scoreboard.

AMD's main products were historically known arsenic a cheaper alternate to Intel CPUs, and for years, it operated successful Intel's shadow. But arsenic Nvidia's Blackwell chips began to alert disconnected the shelves to conscionable the exponentially increasing AI demand, customers similar OpenAI began looking for alternatives to conscionable their interior needs, and AMD's Instinct AI accelerators stepped successful to capable that gap. The effect is present reflected successful AMD's banal price, which has risen by astir 121% implicit the past twelvemonth (as of Jan. 29).

When stock prices emergence that much, that fast, valuation concerns astir the banal emergence arsenic well. Currently, the banal is trading astatine astir 132 times trailing-12-month net and 102 times guardant net (GAAP). Historically, precocious P/E multiples person been corrected by either accelerating net maturation oregon compressing banal prices.

Let maine beryllium clear: For AMD to go the apical AI banal this year, it doesn't person to bushed Nvidia astatine marketplace headdress oregon thing of the sort. In fact, it doesn't truly person to bushed anyone at any game. It conscionable needs to support doing what it's been doing implicit the past mates of quarters.

In its latest fiscal results, AMD reported that gross grew 36% twelvemonth implicit twelvemonth to $9.2 billion, beating analysts' expectations of $8.7 billion. Earnings per share, meanwhile, came successful astatine $1.20 (adjusted) versus the $1.16 estimate. Overall, it was an fantabulous 4th that showed that AMD's AI offerings (data halfway and consumer-grade chips) are seeing accrued usage crossed the board.