The stock market was not very impressed with Advanced Micro Devices (NASDAQ:AMD) first-quarter earnings report. Because it was looking for some kind of blowout number due to tailwinds from artificial intelligence (AI), when the chipmaker didn’t meet those lofty goals AMD stock sold off.

Although its shares have since regained that lost ground, there is still ripe opportunity for investors to capitalize on the market’s myopia. Advance Micro Device’s performance was actually stellar precisely because of AI. It shows what the chipmaker is capable of.

Since AMD stock still has significant upside potential, investors should use the opportunity to benefit.

An AI Power Boost

Advanced Micro Devices’ revenue fell 11% sequentially to $5.47 billion but that was due to seasonality. Sales were up 2% year over year and were better than the midpoint of the guidance it provided. The gains came primarily because of the huge jump in AI sales. Analysts estimate AMD generated $600 million in data center AI graphics processing unit (GPU) sales — starting from $0 a year ago. 

It is clear AMD hit the ground running with its new chips, the MI300X. While Advanced Micro Devices is making inroads and even stealing some market share, there is little likelihood it is going to attain parity with Nvidia (NASDAQ:NVDA). But that’s okay. The AI market is expanding rapidly enough that there will be plenty of room for multiple winning investments. 

AMD’s profitability also significantly widened with gross margins expanding 150 basis points to 52.3%. Net income of $1 billion produced earnings of 62 cents per share, up from 60 cents last year.

The data center business could become AMD’s biggest driver of growth as cloud, data center operators and hyperscalers focus on scooping up AI accelerators. AMD forecasts data center GPU revenue will exceed $4 billion, suggesting that at this rate of growth, AI GPU sales could near $1 billion. As the chipmaker expands and accelerates its AI hardware and software roadmaps, it could exceed $4 billion in AI sales for the year.

PCs Will Still Be a Drag

As strong as the data center business is, AMD’s client segment, which is mostly PCs, remains soft. Although central processing unit (CPU) segment surged 80% year-over-year and 2% sequentially on the strength of its ​​AMD Ryzen 8000 Series chips, that was more a result of facing much easier comparisons. Last year was dreadful for PC CPUs so it was a simple yardstick to step over. 

AMD gained share there as well and is seeing an acceleration in uptake of its EPYC CPUs. It said that a number of large enterprises, including American Airlines (NASDAQ:AAL), Shell (NYSE:SHEL) and SD Micro, increased their deployments of the chips.

Notably, AMD highlighted Lenovo announced it was using the EPYC CPU in two new platforms, particularly its ThinkAgile MX455 V3 Edge Premier Solution. That is an AI-optimized platform for Microsoft‘s (NASDAQ:MSFT) Azure Stack HCI, a hybrid product that connects a company’s on-premises system to its Azure platform for cloud-based services.

AMD Stock is The One to Beat

AMD will continue to dominate Windows-based systems for years, along with Intel (NASDAQ:INTC). While some customers have been able to migrate away from these chips, such as Apple (NASDAQ:AAPL) did with its in-house, Arm Holdings (NASDAQ:ARM)-based chips, it’s not easy. Most customers will simply stay with existing architectures.

Moreover, Intel has fumbled the ball several times as it moved to a foundry set up. AMD, on the other hand, maintains its position because of its strong relationship with Taiwan Semiconductor Manufacturing (NYSE:TSM). That could allow the chipmaker to steal even more share from its rival.

Coupled with the rapid expansion of AMD’s AI offerings and AMD stock quickly becomes the sleeper investment with the greatest opportunity for growth. It is going to be increasingly difficult for Nvidia to keep growing at the rate it has as it runs up against phenomenal comparables, particularly as the year advances. 

That means Advanced Micro Devices could experience similar growth rates going forward. Although the business volumes might not be comparable, AMD’s stock is likely to be the one to beat.

On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.