With lucrative deals in place, AMD could surpass both companies by 2028 as AI demand grows
Category: Business
In the rapidly shifting world of artificial intelligence (AI), stock performance can be as unpredictable as the technology itself. Recently, Advanced Micro Devices (AMD) has emerged as a formidable contender, potentially set to eclipse both Micron Technology and Palantir Technologies in market value by 2028. This shift comes as both Micron and Palantir, once the darlings of the AI stock market, face mounting pressures that could hinder their growth.
Over the past couple of years, Micron's stock has soared by an impressive 272%, and Palantir has outdone that with a staggering 527% increase. Yet, both companies are currently experiencing headwinds. Palantir's stock has plummeted by 20% so far in 2026, raising eyebrows among investors. Similarly, Micron has seen its stock become volatile, primarily due to concerns surrounding the sustainability of AI-driven memory demand following a potential technological breakthrough from Alphabet that could lessen the need for memory chips in data centers.
Palantir's financial metrics are particularly concerning. The company trades at a hefty 225 times trailing earnings and 108 times forward earnings, even after its recent pullback. Such high valuations raise questions about future growth potential, especially as analysts predict Micron's earnings will significantly grow over the next couple of years but then decline thereafter. This outlook could weigh heavily on Micron's stock price, making the future look uncertain.
In stark comparison, AMD has been steadily carving out its niche within the AI data center segment. The company has secured two major deals that could significantly bolster its revenue and growth rate. In October, AMD signed a deal with OpenAI, the organization behind ChatGPT, to supply 6 gigawatts (GW) of its Instinct graphics processing units (GPUs). The deployment of the first gigawatt is set to begin in the second half of 2026. According to Bernstein Research, building a 1 GW data center costs around $35 billion, with approximately 39% of that budget, or about $14 billion, allocated to GPUs. If OpenAI deploys all 6 GW of AMD’s chips, the revenue potential could reach around $80 billion in the long run.
Not resting on its laurels, AMD also inked a multiyear deal with Meta Platforms in February, which includes deploying another 6 GW of AMD GPUs. This partnership could similarly add another $80 billion to AMD's revenue pipeline. Meta will not only utilize AMD's GPUs but will also continue to purchase AMD's Epyc server CPUs for its data centers, indicating that the actual revenue potential from this collaboration could be even greater.
Analysts are optimistic about AMD's financial outlook, forecasting a 35% revenue jump in 2025, bringing total revenue to approximately $46.6 billion. This acceleration in growth is expected to translate into impressive earnings growth, positioning AMD as a stock to watch in the coming years.
As of now, Micron and Palantir boast a combined market cap of roughly $854 billion. Palantir's steep valuation could hinder its stock from climbing higher, and Micron's earnings growth is projected to be short-lived. In stark relief, AMD's forward earnings multiple stands at about 39, significantly lower than Palantir's 108, making it a more attractive option for investors. AMD's valuation aligns closely with the average earnings multiple for the U.S. tech sector, which is also around 39.
Assuming AMD's earnings reach $14.78 per share by 2028, and the stock trades at even 36 times earnings at that time, it could see its stock price soar to about $532—a potential increase of 106% from its current levels. This leap could push AMD's market cap to nearly $868 billion by the end of 2028, allowing it to surpass the combined market caps of Palantir and Micron.
Investors looking for a top AI stock that could significantly boost their portfolios should keep a close eye on AMD. The company’s strategic partnerships and its positioning within the AI market suggest a promising future. As the demand for AI continues to grow, AMD appears ready to capitalize on the opportunities ahead.
In the ever-evolving tech sector, where fortunes can shift overnight, AMD's strategic moves may not only redefine its market standing but could also challenge the dominance of established players like Micron and Palantir. As we look toward 2028, the question remains: will AMD realize its potential, or will unforeseen challenges arise? Investors closely.