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Microsoft will start deploying AMD's Helios platform in the second half of 2026.
AMD has already secured a major customer for the Helios rack-scale servers: Meta Platforms.
The growing adoption of Helios could help AMD easily crush analysts' expectations and deliver better-than-expected guidance.
This has been an amazing year for Advanced Micro Devices (NASDAQ: AMD) investors so far, as shares of the semiconductor specialist have jumped by an impressive 144%.
This incredible rally in AMD stock is well deserved, as the company is gradually becoming more influential in the artificial intelligence (AI) chip market. The good news for investors is that AMD's rally could get a nice shot in the arm when the company releases its second-quarter results after the market closes on Aug. 4, following a new development.
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AMD has just scored a big customer for its rack-scale AI server platform
It has been just over a year since AMD announced that it will offer a next-generation AI server rack, known as Helios, to hyperscalers and AI companies. This rack-scale system integrates the chip designer's data center graphics processing units (GPUs), Epyc server processors, Pensando networking chips, and enormous amounts of high-bandwidth memory (HBM) to quickly process AI workloads in data centers.
AMD has already landed a major hyperscaler in the form of Meta Platforms to deploy Helios. And now, the chip designer has just announced that Microsoft will also deploy the Helios rack-scale servers in its Azure data centers "to power frontier model AI inference for Microsoft, its AI customers and support Azure AI services."
Additionally, Microsoft will use two additional Epyc server processors from AMD and increase adoption of Pensando chips to enhance its Azure networking services. AMD notes that it will start shipping Helios to Microsoft and other customers in the second half of 2026.
This is great news for AMD investors ahead of its Q2 earnings report next month. The AI server market is anticipated to grow by nearly 6x between 2024 and 2030, generating $838 billion in revenue by the end of the decade. AMD can capture a larger share of this lucrative space by offering rack-scale systems that leading server manufacturers can deploy.
Moreover, AMD's partnership with Microsoft could help it deliver stronger-than-expected results on Aug. 4.
AMD's guidance could exceed expectations
AMD expects a 46% year-over-year increase in Q2 revenue to $11.2 billion. Analysts, however, expect slower year-over-year revenue growth of 35% in Q3 to $12.45 billion. The company could easily exceed that estimate since it is poised to begin sales of the Helios rack-scale systems in the second half of 2026.
This also explains why analysts are estimating AMD's top-line growth to accelerate to 57% in 2027 from an estimated 43% this year. Even better, the company's growth rate is poised to remain robust even in 2028.
If AMD's revenue reaches $106.5 billion in 2028 and it trades at even 15 times sales at that time, a discount to its current sales multiple of 22, its market cap could increase to $1.6 billion. That's 80% higher than AMD's current market cap, giving investors a solid reason to buy this AI stock ahead of its quarterly report.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy.
