Key Points

• Advanced Micro Devices (AMD) recently became the latest American public company to amass a $1 trillion valuation, joining 12 others.

• AMD has experienced an incredible increase in value on the back of surging demand for its artificial intelligence chips.

• However, investors might want to consider AMD's hefty valuation before setting their sights on the $2 trillion milestone.

• 10 stocks we like better than Advanced Micro Devices ›

The U.S. is home to 13 public companies worth $1 trillion or more, and Advanced Micro Devices (NASDAQ: AMD) is the newest member of that exclusive club. The semiconductor giant has increased in value by a whopping 190% during 2026 alone (as of this writing on Sept. 25), thanks to explosive demand for its artificial intelligence (AI) chips and components.

Chief Executive Officer Lisa Su recently issued an extremely bullish 2027 forecast for AMD's data center business, so investors might feel there is more upside on the horizon for the company's stock. However, here's why it might be premature to start thinking about a $2 trillion valuation.

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AI companies are lining up for AMD's latest data center chips

Graphics processing units (GPUs) are the primary data center chips used in AI training and inference workloads. AMD launched its first dedicated AI GPU in 2023, called the MI300X. It wasn't quite as powerful as Nvidia's H100 chip, which led the industry at the time, but it still attracted major customers including Microsoft and Oracle.

AMD spent the next few years closing the performance gap to Nvidia. In fact, its latest MI450 series GPU can be up to 15% more powerful and 30% more energy efficient than anything else on the market when paired with the company's fully integrated data center rack, called Helios. Therefore, this setup is a legitimate alternative to Nvidia's new Vera Rubin systems.

OpenAI and Meta Platforms plan to deploy 6 gigawatts' worth of computing capacity using AMD's chips over the next few years, and they will start with the MI450 GPUs and Helios racks. Anthropic and Microsoft also plan to adopt the MI450 and Helios, so this configuration is already proving very popular.

Looking ahead, AMD is now working on the MI500 series, which is scheduled to start shipping in 2027. Lisa Su recently told shareholders this new GPU could produce a staggering 2,000 times more performance than the company's original MI300X, highlighting the incredible pace of innovation.

AMD's data center revenue could double in 2027

AMD breaks its business into three core segments, which combined to deliver $11.5 billion in revenue during the second quarter of 2026 (ended June 30). However, the data center segment brought in a record $6.7 billion on its own, a whopping 107% increase from the year-ago period.

Su believes data center sales will continue to more than double in 2027. But this could merely be the beginning, because she recently predicted the market for data center chips could soar to $1.4 trillion by 2030, leaving AMD with a long runway for growth.

As GPUs evolve to deliver more performance and better energy efficiency, they will gradually reduce the cost of deploying AI software while making data center operators more profitable, creating a flywheel effect that should support ongoing demand for chips.

Here's why a $2 trillion valuation might be off the table for now

AMD's business might be firing on all cylinders right now, but investors should be wary of its valuation. Based on the company's adjusted (non-GAAP) trailing-12-month earnings of $5.76 per share, its stock is trading at a price-to-earnings (P/E) ratio of 109, almost quadruple Nvidia's P/E of 28.3.

Looking ahead, Wall Street's average estimate (provided by Yahoo! Finance) suggests AMD could grow its earnings to $15.58 per share in 2027, placing its stock at a forward P/E of 40.3. While that valuation appears slightly more attractive, it's still higher than Nvidia's P/E today.

As a result, I don't think it's realistic to expect AMD stock to double over the next 18 months or so, meaning a $2 trillion market cap might be off the table for now. Nevertheless, reaching the $1 trillion club was a phenomenal achievement, and if the market for data center GPUs becomes as valuable as Su recently predicted, then AMD shareholders will probably enjoy steady upside over the long term.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Oracle. The Motley Fool has a disclosure policy.