New Delhi: Investors rushed into the Advanced Micro Devices (AMD) stock on Monday, pushing it past $1 trillion in market value for the first time, making it the third chipmaker in a three-lane race to reach the milestone behind Nvidia Corp. and Broadcom Inc. themselves after betting big on the expansion of AI computing.
Shares ended 9.6% higher at a new alltime high of $613.50 after a significant gain of as much as 9.95% during the day. The rally follows a stellar year for AMD shares, which have more than doubled, thanks to a series of marquee deals for AI infrastructure.
The surge comes after two blockbuster pairings that came earlier this year. But in February, Meta agreed to purchase up to six gigawatts of AMD’s Instinct GPUs, a purchase that would cost over $100 billion, and also received warrants that would give it approximately 10 percent of AMD’s shares if the chipmaker achieves certain performance and stock price targets. That came after an even bigger deal with OpenAI, in which the ChatGPT company agreed to supply up to six gigawatts of AMD chips, with starting chip lines of the new AMD MI450 that it would receive a warrant for up to 160 million shares (about 10 percent of OpenAI).
Under both offers, full vesting would only rely on AMD’s stock climbing about three times from the previous price, something that has just become achievable on Monday.
AMD’s rise reflects the general trend of repricing the chip industry with an AI boost. Nvidia has joined the $1 trillion club in 2023 with its value sitting at more than $4 trillion, and last year Broadcom became the first chipmaker to hit the $1 trillion mark and is now approaching over $1.8 trillion. The renewed interest in AMD is driven by investors’ increasing belief that the chipmaker, which has been considered a pretty distant second to Nvidia in the field of AI accelerators, has the potential to gain a foothold as the second source of compute power for the hyperscalers frenzied to expand their data center facilities.
While analysts observe the valuation remains a big bet on AMD’s ability to fulfill these large-scale order commitments with OpenAI and Meta that are coming from AI infrastructure, concerns on Wall Street have grown over the last few years that the infrastructure is outpacing the near-term demand.
