AMD's AI Phase 1 surge is real but valuation upside may be limited

The article reports AMD saw meaningful data center revenue in its latest quarter as Phase 1 of the AI infrastructure capex cycle peaks; it also warns that AMD's elevated valuation could compress as spending shifts from securing capacity to utilizing it.

Phase 1 of the AI infrastructure capital expenditure cycle appears to be approaching a peak. This phase has been marked by urgency, scarcity-driven ordering, and front-loaded, redundant buildouts. The article reports that Advanced Micro Devices (AMD) benefited meaningfully as a second credible supplier at scale. It also argues the cycle is shifting from securing capacity toward utilizing existing capacity. Key facts: - The article reports AMD's latest quarter included $9.246 billion in total net revenue and $4.341 billion from its Data Center segment. - The piece describes AMD as the only credible second supplier at scale to Nvidia, serving as compute-market insurance for large customers. - Valuation metrics cited include a forward price-to-earnings ratio roughly 120% above the sector median and a forward PEG about 26.5% below the sector median. - The article notes Wall Street consensus of 26 Buys, eight Holds, and zero Sells, and cites an average price target of $283.48 (given as implying about 23% upside over 12 months). - It argues Phase 1 capex waves tend to resolve through utilization and digestion rather than collapse, and that markets may compress multiples even if semiconductor growth continues. Summary: The article frames strong near-term revenue gains for AMD within a capex cycle that was heavily front-loaded. It suggests valuation compression is the likely near-term market response as spending shifts from building capacity to using it. The author expects Phase 2 to bring steadier growth spread across more vendors, reducing the degree to which markets reward cyclicality.