AMD Unveiled Its 3-5 Year Outlook. Here Are Three Things to Watch

Global AI chip giant $Advanced Micro Devices(AMD)$   hosted its Financial Analyst Day today, with management outlining robust growth expectations for the next three to five years.

AMD Datacenter Growth vs. Rivals in Focus

~$NVIDIA(NVDA)$   : Reported Q3 Data Center revenue (incl. server GPU/CPU/networking) of $48.99 billion, up 59% YoY. The market projects its Q4 Data Center revenue at $55.8 billion, a 57% YoY increase.

~$Broadcom(AVGO)$   : Reported FQ3 AI revenue (incl. AI ASIC/networking/optical) of $5.2 billion, up 63% YoY. The market projects FQ4 AI revenue at $6.2 billion, a 66% YoY increase.

~$Advanced Micro Devices(AMD)$  : Reported Q3 Data Center revenue (incl. server CPU/GPU/networking/FPGA) of $4.34 billion, up 22% YoY, surpassing Intel's Data Center segment. The market projects Q4 Data Center revenue at $4.95 billion, a 28% YoY increase.

~$Intel(INTC)$   : Reported Q3 Data Center & AI (DCAI) revenue (incl. server CPU/GPU/networking/FPGA) of $4.12 billion, down 1% YoY. The market projects Q4 DCAI revenue at $4.5 billion, a 3% YoY increase.

This comparison highlights that AMD's current Data Center revenue scale and growth rate lag the top two industry leaders. Consequently, the market is demanding clearer revenue growth guidance from AMD for 2026 and beyond.

Three Things to Watch:

The Long-Term Financial Model

AMD is targeting a revenue Compound Annual Growth Rate (CAGR) of over 35%, a non-GAAP operating margin exceeding 35%, and non-GAAP earnings per share (EPS) surpassing $20 within the next three to five years. Management clarified that this is an annualized earnings power target to be achieved within that window, rather than a cumulative figure or a target strictly tied to the calendar year 2030. In the near term, the company reported a Q3 non-GAAP gross margin of 54% and guided approximately 54.5% for Q4.

Divergent Trajectories: AI Hypergrowth vs. Core Stability

Management highlighted a forecasted CAGR of over 60% for data center revenue—and over 80% specifically for data center AI revenue—reinforcing their projection of a $1 trillion data center chip market by 2030. Meanwhile, the Embedded, Client, and Gaming segments are collectively targeting double-digit growth over the long term, providing a diversified growth engine to support the company beyond the AI boom.

The 2030 Bridge: The Critical OpenAI Factor

The partnership with OpenAI emerged as a central pillar of AMD's long-term guidance. Details revealed that OpenAI received warrants for up to 160 million shares with a strike price of $0.01. Vesting is tranche-based, tied to deployment milestones ranging from 1 to 6 gigawatts (GW) and specific share price targets, with the final tranche requiring a stock price of $600. Notably, these deliveries involve full rack-level solutions, not just accelerators.

This deal acts as a major catalyst for the company's aggressive targets. The company's baseline model assumes a 35% CAGR off a projected 2025 revenue base of $34 billion. This implies a 2026–2030 total revenue of approximately $456 billion and an illustrative EPS trajectory climbing from roughly $3.97 to $20 by 2030. The scale of the OpenAI agreement is a key component in justifying this trajectory.

A hypothetical delivery cadence of 1, 1, 1.5, 1.5, and 1 GW from 2026 through 2030 could yield cumulative revenues of $82 billion, $132 billion, or $195 billion under low, mid, and high pricing scenarios for rack-scale systems. This would account for approximately 18%, 29%, or 43% of the five-year revenue total, respectively. The share dilution impact would be highest initially and decline as AMD's overall revenue base scales.

Summary

AMD's roadmap relies heavily on executing AI rack-scale deployments and achieving margin expansion driven by a favorable product mix. The OpenAI partnership serves as a cornerstone of this guidance. While the warrant structure solidifies multi-GW demand visibility, it suggests AMD's path to $20 EPS is heavily dependent on the success of this major collaboration, creating high expectations for operational execution.

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