Should You Buy AMD Stock as the AI-Agent Chip Race Heats Up?
Key Points
Unlike servers built around AI accelerators, AMD's AI agent computers run as local, standalone systems.
As AMD benefits from huge stock gains, investors need to watch its valuation.
Advanced Micro Devices (NASDAQ: AMD) has emerged as one of the leading companies in the AI-agent chip race, gaining traction in this nascent market despite having to compete with the likes of OpenAI and Nvidia.
AMD's early prominence in this niche also leaves investors with a difficult choice: They must evaluate what the technology can do in the market, and what, if anything, that success will do for the chip stock.
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AMD and agentic AI
Agent computers are a new category of system, one designed to be always on, operating in the background and running AI agents continuously. High-performance x86 architecture and large, unified memory pools powered by AMD's Ryzen AI Max+ processors drive these systems. Such systems also won't require monitors. Instead, they'll autonomously perform tasks delegated to them by humans.
Moreover, these are local devices that act simply as standalone workstations. That differs from the high-end training and cloud-based inference servers associated with Nvidia and, to a lesser extent, AMD. Thus, agent computers and the Ryzen processors that power them fall under the umbrella of AMD's client business, not its data center segment.
Although the company has not yet started to break out how much revenue it earns specifically from AI agent computers, we know that the client business accounted for about 27% of AMD's revenue in the first half of 2026. The segment also increased its revenue by 24% year over year. Overall, AMD's first-half 2026 revenue was nearly $22 billion, a 44% rise from year-ago levels driven mostly by the data center segment.
Additionally, since AMD held the growth of its operating expenses in check, its net income surged 133% higher over the same period to nearly $3.7 billion. Amid that growth, the stock has risen by 280%, well outpacing Nvidia this year.
Unfortunately, AMD's gains are running into a concerning headwind -- the stock's valuation. Despite its triple-digit revenue growth, investors may be leery of paying 156 times earnings for the stock, and its forward P/E ratio of 80 may not offer enough comfort, particularly when Nvidia trades at 29 times earnings.
Thus, even with its apparent new successes in the AI chip race, investors may want to be cautious for now.
Moving forward with AMD
Considering the stock's valuation, investors should probably treat AMD as a hold.
The company has benefited tremendously from its advancements in the AI chip field, and its AI-agent processors are likely to play a role in that success. Such potential should inspire shareholders to keep their shares.
However, even with those successes, it is difficult to justify AMD's valuation, particularly considering that Nvidia trades at a more reasonable valuation. Although sales of AI agent computers should boost the company, its near-term outlook is probably too uncertain for investors to add more shares of AMD to their portfolios at this time.
Will Healy has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.