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Here’s Why AMD Surged 10% Yesterday

Friday, November 18, 2016 6:41
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From Zacks: Advanced Micro Devices, Inc. (NASDAQ:AMD) shares have been steadily scaling higher grounds over the last one year. The stock generated a whopping return of 303.68% compared with the S&P 500 index’s 6.51%.

The phenomenal growth in the stock price of Advanced Micro was primarily driven by the introduction of several new accelerated processing units (APUs) and graphics processing units (GPUs). Additionally, upcoming new products like Zen are expected to drive the top line in the long run. Moreover, partnerships with the likes of Alibaba for the supply of Radeon Pro GPUs for its cloud services will boost its competitive prowess.

Meanwhile, the company announced on Tuesday that its FirePro server GPUs have been selected by Alphabet Inc.’s (GOOGLFree Report) Google to power its cloud platform in 2017.



What Does This Mean for Advanced Micro?

Cloud computing is gradually gaining traction among the masses, given the flexibility and advantages it offers. As per an IDC report, worldwide spending on cloud services is estimated to reach $195 billion by 2020, growing at a CAGR of 20.4%.

Currently, the cloud computing GPU arena is being dominated by NVIDIA Corp. (NVDAFree Report) , whose Tesla GPUs are very popular among Amazon’s (AMZNFree Report) Amazon Web Services, IBM’s cloud and Microsoft’s Azure. With Advanced Micro clinching the deal for supplying its FirePro GPUs to power Google’s data centers in 2017 alongside NVIDIA’s GPUs, things are likely to shape up well for the company in the long run.

We note that the adoption by Google is a validation of Advanced Micro’s progress in the GPU hardware segment.

AMD shares closed at $8.46 on Thursday, up $0.79 (+10.30%), and added another 1.3% in premarket trading Friday.

This article is brought to you courtesy of Zacks Research.

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