AMD stock crosses $1 trillion market cap for first time

Advanced Micro Devices (AMD) achieved a historic milestone on Monday by crossing the $1 trillion market capitalization threshold for the first time. The significant surge in stock price, reaching a record intraday high of $613.92, was fueled by a five-day rally driven by growing demand for AI chips.

The climb in AMD stock was as high as 10% on the day, positioning the chipmaker alongside industry giants such as Micron Technology, Broadcom, Taiwan Semiconductor Manufacturing Company, and Nvidia. These companies joined an elite group of semiconductor companies with valuations at or above the $1 trillion mark. Bloomberg reports that there are 15 other publicly traded companies worldwide at this valuation level.

The five-day rally injected approximately 24% into AMD's stock, resulting in a year-to-date gain surpassing 180%. Despite this impressive performance, AMD still trails AI chip leader Nvidia, which boasts a market capitalization of around $5.4 trillion.

The positive momentum extended across the sector on Monday. Intel shares surged by 12%, while Arm Holdings jumped up to 14%. The Philadelphia Semiconductor Index also advanced more than 4%.

Investor enthusiasm for chip stocks was further bolstered by the success of Meta Platforms' (formerly Facebook) AI Agent, which climbed to the top of Apple's App Store free applications chart upon its launch earlier in the month. This surge in popularity generated demand for the shares of companies providing processors essential for running agentic AI workloads. Meta's stock rose by more than 7% on Monday, making AMD's second-largest customer.

AMD's own growth has been propelled by its AI-driven data center business. The company reported first-quarter revenue of $10.25 billion, reflecting a 38% year-over-year increase. Within the data center segment, AMD's revenue surged by 57% compared to the previous year, amounting to $5.78 billion.

AMD CEO Lisa Su attributed the company's recent growth surge to the thriving data center unit. She stated at a previous earnings call that the data center segment had become the central engine driving revenue and profit expansion. This trend continued into the second quarter, with revenue reaching $11.54 billion, representing a 50% increase year-over-year. Notably, the Data Center segment contributed $6.7 billion to the total, more than doubling its revenue from the prior year.

AMD's optimistic outlook extends beyond the current quarter. Lisa Su revealed at last month's earnings call that the company aims to double its data center revenue by 2027. The infrastructure spending wave driving chip demand remains strong, with Nvidia CEO Jensen Huang expressing bullish sentiment last week. He projected that his company would ship twice as many chips in the coming year.