AMD Shares Rise on $2 Trillion AI Market Forecast and Strong Demand Outlook

Shares of Advanced Micro Devices (AMD) jumped approximately 7% on Tuesday after management presented an aggressive growth strategy for artificial intelligence, anchored by a new forecast for the total addressable market.

A $2 Trillion Market Opportunity

During a presentation at the Citi Global TMT Conference, AMD management projected the total addressable market (TAM) for AI could reach $2 trillion by 2030. According to a summary of the event from Citi, the chipmaker's outlook is based on a significant shift in computing demand from training large AI models to executing them, a process known as inference.

AMD management noted that inference has become the "majority driver of AI computing" over the past year. This trend is being driven by the evolution of AI workloads from simple chatbots to more complex, independent agentic systems, which dramatically increases the need for high-performance processing.

Surging Demand and Product Ramp-Up

To meet this growing demand, AMD projects its data center business will more than double in the next year. The company is also seeing strong growth in its traditional computing segments that support AI infrastructure.

Key growth projections and product updates include:

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• The server CPU business is expected to expand more than 80% year-over-year in the second half of this year and over 70% next year.
• The company's next-generation AI accelerator, the MI450 GPU, will launch this quarter, with production ramping up in the fourth quarter and through 2027.

Evidence of strong customer demand is mounting for AMD's complex, rack-scale Helios systems. The company counts Meta Platforms and two other unnamed AI labs as anchor clients, all of whom have reportedly provided demand forecasts that exceed their initial purchase agreements. AMD also noted that demand is emerging from new "neo-cloud" providers.

Financial Outlook and Future Pipeline

While AMD's data center GPUs currently have profit margins below the company's corporate average, management stated that strong double-digit growth in its high-margin server and embedded segments is offsetting this dilution. Looking ahead, AMD said it is engaged with its three leading customers on its next-generation MI500 and MI600 chips.

The company also disclosed a partnership with Cerebras and alluded to unannounced internal plans to further address the market for low-latency inference, signaling a long-term strategy to capture a significant share of the expanding AI sector.