AMD Stock Tests $478 as Saudi AI Deployment and Data Center Growth Support Breakout

Q2 revenue for AMD was $11.536 billion, which was a 50 percent increase year-over-year, and a 13 percent increase quarter-over-quarter. GAAP operating income for Q2 totals $1.99 billion and GAAP net income for the quarter came in at $2.30 billion, while on a non-GAAP basis, operating income was $3.09 billion with diluted EPS of $1.66.

The most important metric of this quarter was Data Center revenue, which came in at $6.7 billion accounting for about 58 percent of total revenue. This mix shows that AMD is shifting to a business model more driven by EPYC server CPUs and Instinct AI accelerators, as compared to its reliance on gaming and PCs.

Management anticipates revenue for Q3 coming in at the $13 billion range, plus or minus $300 million, and projected non-GAAP gross margin to come in at around 56 percent. Adjusted for midpoint guidance, revenue would increase 41 percent year-over-year, and 13 percent quarter-over-quarter.

AMD expects Data Center sales to pick up in the second half of 2026. This is the most important statement as it implies that the growth in Q2 was not a one-time event.

The latest official company catalyst came on August 31 when AMD, Cisco, and HUMAIN announced that production AI infrastructure powered by AMD Instinct MI355X GPUs and AMD EPYC CPUs had gone live in Saudi Arabia and was serving customers.

The partners plan to add up to 250 MW of additional AI infrastructure starting in 2027, and the larger joint venture remains targeted at up to 1 GW by 2030. The figures are deployment targets rather than estimated income, but they confirm that AMD is winning large abroad sovereign AI projects outside the U.S. hyperscaler market.

AMD’s partnership with Anthropic will add a significant demand signal. Anthropic plans to deploy up to 2 GW of AMD Instinct MI450-series GPUs in Helios rack-scale systems, with the first gigawatt expected to begin deployment in the first half of 2027.

Microsoft is also a significant customer of next-generation AMD Instinct and EPYC products. AMD will be able to achieve rapid growth without displacing NVIDIA from the majority of the market. Even moderate gains in accelerator market share can result in billions of additional revenue opportunities within the rapidly expanding AI infrastructure market.

AMD’s Helios system builds on the combination of Instinct GPUs, EPYC CPUs, networking, and ROCm software. This is important as more large customers are looking to buy complete systems, rather than individual components.

In August, AMD agreed to acquire Taalas, an AI inference silicon specialist. Inference silicon is becoming important as AI agents and enterprise applications begin to transition from heavy training workloads to continuous production workloads.

Increasingly, China is becoming a less predictable growth area. Economic restrictions on advanced accelerators imposed by the U.S. continue to limit sales. Meanwhile, companies focused on AI in China are starting to make progress and build offerings. Even though this leaves AMD with a large opportunity outside of China, increasing more competitive pressure, the short and long term macro outlooks are not better. High oil prices coupled strong job growth in the U.S. signaling tighter monetary policy will all increase the macro discomfort. Financing for hyperscaler and sovereign AI projects may become more costly as semiconductor valuations begin to contract.

AMD closed Friday at $477.57 matching the chart's $477.56 reference, rebounding from the $451.86 support zone. Price is currently testing $477.66 where the descending side of the symmetrical triangle intersects the moving average.

AMD Price Chart - Source: Tradingview

The $477.66-$478.30 zone is the immediate breakout zone. If $477.66-$478.30 is closed above for a period of two hours, the bull case is reinforced with $499.35 and $517.64 coming into play. Further rally may take price to $536.27.

RSI at 64 levels is above the signal line at 44 and is bullish, showing short term control without overbought status. To the downside, $451.86 is the key support level. A break below the demand zone of $445-$452 would expose $430.34 and $410.31 support levels.

Key Levels

·       Latest completed close: $477.57

·       Breakout resistance: $477.66-$478.30

·       First upside target $499.35

·       Higher targets $517.64 and $536.27

·       Key support: $451.86

·       Demand zone $445-$452

·       Deeper supports: $430.34 and $410.31

·       RSI around 64

AMD is seeing record growth in data centers. They also have live AI deployments in Saudi. There are accelerating deployments of Instinct and EPYC. There are significant forward commitments for AMD's services from Anthropic and expanding customer validation from Microsoft.

$478.30 is the level that confirms another breakout from the current symmetrical triangle for AMD.

AMD is doing well as shown by record 2nd quarter revenue and a 107% increase in the Data Center Unit. There are also more hyperscaler and sovereign-AI deployments. AMD is now at a significant level at which the breakout is not yet confirmed. I am constructive as long as $451.86 is held. $477.66 - $478.30 is the breakout level and the next leg to $499 - $518 is confirmed only after a sustained break above that zone.