- AMD surpassed $1 trillion in market value, driven by rising AI hardware demand
- AMD shares rose 9.6% to $613.31, becoming the fourth US chipmaker above $1 trillion
- AI-related investments revived chip stocks amid economic slowdown concerns
Advanced Micro Devices surpassed $1 trillion in market capitalisation on Monday, fuelled by a significant increase in demand for AI-related hardware.
AMD shares last rose 9.6% to $613.31, hitting a new record high, becoming the fourth US chipmaker to exceed the trillion-dollar threshold, following Nvidia, Broadcom, and Micron.
The milestone marks the culmination of a strong uptrend for the Santa Clara, California-based company, widely seen as the leading competitor to AI benchmark Nvidia in graphics processing units, Reuters reported.
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In 2023, Nvidia surpassed the threshold and has since become the world's most valuable company, valued at over $5 trillion. "Money is moving back into the AI trade," said Thomas Hayes, chairman at Great Hill Capital LLC in New York.
Interest in chipmakers has waned in recent months as markets closely examined AI spending by hyperscalers. Rising oil prices, tied to the US-Iran conflict, and forecasts of persistently higher interest rates further intensified the pressure.
But now investors believe AI is the only area that can work in a Federal Reserve-induced economic slowdown, Hayes said. "AMD is representative of that."
On Monday, most chip stocks rose, with IntelAMD's rivalgaining about 11.8% and Qualcomm climbing 4.5%. The broader chips index rose 2.7%, reaching an over one-month high.
AMD has sped up its AI product releases and shifted from selling standalone chips to delivering full systems integrating processors, networking equipment, and other hardware to challenge Nvidia.
The increasing demand for central processing units paired with graphics processors in servers managing inference has, in turn, enabled it to capture market share from Intel.
Last month, AMD predicted quarterly revenue would exceed Wall Street's estimates, but still didn't meet the high expectations of investors.
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However, the stock's 185% increase in 2026 has significantly exceeded the Nasdaq's 15.8% rise, positioning it among the top performers in the S&P 500.
AMD's last trade was around 41 times its 12-month forward earnings, lower than its 10-year average of 44, but significantly higher than Nvidia's recent trades at 16.3 times forward earnings.
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