AMD joins $1tn club as chipmakers rally on AI-driven demand

Advanced Micro Devices (AMD) reached a market capitalization of $1tn for the first time on Monday, joining an exclusive club of chipmakers to hit the milestone. The Santa Clara, California-based company, considered the main rival to Nvidia in AI computing, saw its shares rise by 9.6% to $613.31, hitting a record high. This marks the fourth US chipmaker to surpass a $1tn valuation, joining Nvidia, Broadcom, and Micron.

Nvidia, the world's most valuable company worth over $5tn, crossed the $1tn threshold in 2023. Increased investment in the AI sector is driving the rally, according to Thomas Hayes, chairman of Great Hill Capital LLC in New York. Hayes believes AI is the only area that can thrive during an economic slowdown caused by the Federal Reserve's interest rate hikes.

AMD's recent acceleration in AI product launches and its shift from selling individual chips to complete systems has helped it capture market share from Intel. The broader chip sector also benefited from the rally, with rival Intel surging 11.8% and Qualcomm rising 4.5%. The chips index gained 2.7% to an over one-month high. AMD's 185% surge in 2026 outpaced the 15.8% gain in the tech-heavy Nasdaq, placing the company among the top S&P 500 performers.

Despite AMD's impressive performance, the stock's price is still higher than its 10-year average and much higher than Nvidia's current valuation of 16.3 times forward earnings.