Artificial intelligence (AI) stocks have faced stagnation recently due to concerns about slowing AI adoption, but AMD has alleviated these worries.
The rapid uptake of AI has been a major driver of the ongoing bull market over the past two years. Recently, however, investor anxiety has grown over the possible impact of tariffs and waning AI adoption, which could stall the growth that has elevated numerous AI stocks.
For instance, Nvidia reported revenue of $39.3 billion in its fiscal 2025 fourth quarter, ending January 26, marking a 78% increase year-over-year, with earnings per share (EPS) rising 82% to $0.89. Despite these impressive figures, Nvidia’s stock declined by approximately 14% following the report.
Amidst investor concerns about AI sustaining its momentum, Advanced Micro Devices (AMD) presented significant positive developments. Under CEO Lisa Su’s leadership, AMD announced promising first-quarter results after markets closed, with record revenue of $7.4 billion, a 36% increase year-over-year. The adjusted EPS of $0.96 represented a 55% rise, surpassing analysts’ expectations of $7.12 billion in revenue and $0.93 in EPS.
The impressive results were largely driven by AMD’s data center segment, which saw a 57% increase in revenue to $3.7 billion. Meanwhile, the client and gaming segment reported revenue of $2.9 billion, up 28%, although gaming revenue experienced a 30% decline. The company also reported an expanded gross margin of 50%, a 300-basis-point increase from the prior year, attributed to increased data center revenue and a favorable product mix.
Looking ahead, AMD provided a strong outlook for the second quarter, forecasting revenue of $7.4 billion at the midpoint of guidance, exceeding analysts’ projections of $7.24 billion.
CEO Lisa Su emphasized the company’s strong start to 2025, with accelerating year-over-year growth fueled by core business strength and growing data center and AI momentum—an encouraging sign for Nvidia as well.
Beyond AMD’s positive news, the results have wider implications for the technology sector. Despite perceptions of slowing adoption, AI development and availability have reached unprecedented levels. Commentary from major tech companies suggests that data center infrastructure to support AI continues to expand rapidly.
Nvidia remains a central player in this landscape as the leading supplier of graphics processing units (GPUs) essential for AI operations, controlling a significant share of the data center GPU market.
Contrary to the narrative of declining AI uptake, experts predict that AI will generate significant economic value in the next decade. Bloomberg Intelligence estimates the generative AI market will be valued at $1.3 trillion by 2032. McKinsey & Company projects that AI could contribute between $2.6 trillion and $4.4 trillion to the global economy over the next ten years, while PricewaterhouseCoopers estimates a $15.7 trillion contribution by 2030.
While uncertainties about AI adoption, global tariffs, and sales restrictions to China have pressured Nvidia’s stock by 16% since early 2025, the decrease in stock price alongside rising profits presents a compelling opportunity for investors. Nvidia trades at 26 times forward earnings, an attractive valuation for a company deeply integrated within the AI sector.