Can AMD's New AI Chip Match Nvidia and Hit $1 Trillion by 2029?

Published Date : 10/09/2025 

With Nvidia's (NASDAQ: NVDA) recent achievement of the highest market cap in the stock market, investors are increasingly looking at Advanced Micro Devices (NASDAQ: AMD) for potential growth. AMD's upcoming MI400 chip could be a game-changer in the AI accelerator market, potentially pushing AMD's market cap to $1 trillion and beyond. 

Amid Nvidia's (NASDAQ: NVDA) achievement of the stock market's highest market cap, investors have increasingly focused on the growth trajectory of Advanced Micro Devices (NASDAQ: AMD). AMD's current market cap of $260 billion is a small fraction of Nvidia's $4.15 trillion, primarily due to Nvidia's dominance in the AI accelerator market. However, massive growth in this area could come from AMD's advancements in the AI accelerator market.

Preliminary views of AMD's upcoming MI400 chip, which is due out next year, have led to optimism that it could compete with Nvidia's Vera Rubin, which is expected to come out around the same time. Time will tell whether it meets that expectation. Still, if the MI400 brings AMD significant market share gains, it could take its stock to a $1 trillion market cap and beyond. Here's how.

As conditions stand now, AMD's $260 billion market cap has to double just under two times to reach that milestone. Admittedly, the cyclicality of the semiconductor industry can interrupt that growth, at least temporarily. Since AMD operates four different segments, the company is also subject to four different business cycles, which often act independently.

However, investors should remember that Nvidia's data center segment, which designs its AI accelerators, was not even its largest segment four years ago. As of its latest quarter, the data center segment was responsible for 88% of that company's revenue. AMD is not there yet, but it might be on the same path. Its data center segment accounted for 42% of total revenue in the second quarter of 2025. The company has begun to report combined client and gaming numbers, but if it reports the two segments separately, the data center segment is the company's largest.

Investors should also note that data center revenue grew 14% annually in Q2, down from the 57% yearly increase in the first quarter. Export restrictions on chip sales in China and a pause between generations of chips led to what is probably a temporary slowdown.

Shareholders should also note AMD's overall financial performance. In the first half of 2025, the company's revenue of just over $15 billion rose 34% compared to year-ago levels. During that time, its cost and expense increases lagged revenue growth. Thus, its net income of almost $1.6 billion for the first two quarters of 2025 was far above the $388 million earned in the first half of 2024.

Despite near-term challenges, revenue and profits have grown significantly over the last year. Its forward P/E ratio could draw more investors into the stock. If AMD continues to innovate and gain market share, especially with the launch of the MI400, the company could see substantial growth in the coming years. 

Frequently Asked Questions (FAQS): 

Q: What is AMD's current market cap compared to Nvidia's?

A: AMD's current market cap is $260 billion, while Nvidia's is $4.15 trillion.

Q: What is the significance of AMD's upcoming MI400 chip?

A: The MI400 chip is expected to compete with Nvidia's Vera Rubin and could bring significant market share gains to AMD in the AI accelerator market.

Q: What challenges has AMD faced in the data center segment?

A: AMD faced a temporary slowdown in data center revenue growth due to export restrictions on chip sales in China and a pause between generations of chips.

Q: How has AMD's financial performance been in the first half of 2025?

A: In the first half of 2025, AMD's revenue of just over $15 billion rose 34% compared to year-ago levels, and its net income of almost $1.6 billion was far above the $388 million earned in the first half of 2024.

Q: What is AMD's forward P/E ratio, and why is it important?

A: AMD's forward P/E ratio could draw more investors into the stock, as it indicates the company's potential for future growth and profitability. 

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