AMD (AMD) Shares Skyrocket, What You Need To Know

Anthony Lee /
2024/07/10 12:20 pm EDT

What Happened:

Shares of computer processor maker AMD (NASDAQ:AMD) jumped 5.6% in the morning session after the company announced an agreement to acquire Silo AI, an AI lab in Europe, in an all-cash deal valued at approximately $665 million. Silo AI builds solutions that help customers easily add AI to their products, services, and operations. Silo has been used to build and train multilingual LLMs, some powered by AMD Instinct MI250X GPUs. The announcement is likely to be cheered by the market as it signals AMD's commitment to improving its AI capabilities to gain more market share and deliver better solutions to its customers. After the initial pop the shares cooled down to $182.78, up 3.2% from previous close.

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What is the market telling us:

AMD's shares are very volatile and over the last year have had 18 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 20 days ago, when the stock gained 7.5% on the news that Piper Sandler analyst Harsh Kumar named the company a "Top Pick" and maintained an Overweight (Buy) rating on the stock. The analyst cited the reasons for the bullish view heading into the second half of the year, adding, "At this time, MI300 is performing very well with an expected ramp to greater than $4B this year..." 

Harsh continued, "AMD has a slate of new chips coming out on top of MI300 later this year as well as 2025. To start, MI325 is expected to come out later this year and MI350 coming out in 2025. 

Finally, in 2026 we expect MI400 to come out. We note that MI325 and 350 both have HBM3E next generation memory. MI350 will also feature CDNA4 and a 3nm process node that will compete with the Blackwell architecture while MI400 is expected to be competitive to Rubin. In total, AMD has 100+ plus customers today that are ramping with MI300 with key customers including Microsoft, Meta, and Oracle."

AMD is up 31.7% since the beginning of the year, but at $182.78 per share it is still trading 13.5% below its 52-week high of $211.38 from March 2024. Investors who bought $1,000 worth of AMD's shares 5 years ago would now be looking at an investment worth $5,403.

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