What's Happening?
Advanced Micro Devices (AMD) shares experienced a significant rise, reaching a 19-month high, following the announcement of a multi-year supply agreement with OpenAI, the creator of ChatGPT. This deal involves OpenAI purchasing several generations of AI chips from AMD, potentially taking a 10% stake in the company, which is a rival to Nvidia. The agreement is expected to generate over $100 billion in revenue for AMD over the next four years. The stock saw a 24% increase on Monday and continued to rise by over 5% on Tuesday, trading around $215. This surge has positioned AMD's stock for a potential record closing high, with a 77% increase since the beginning of the year, surpassing Nvidia's 40% return in the same period.
Why It's Important?
The deal between AMD and OpenAI is significant as it positions AMD to capture a substantial share of the growing AI market, which is currently dominated by Nvidia. The anticipated revenue from this agreement could bolster AMD's financial standing and market competitiveness. Investors are closely monitoring AMD's stock performance, as the deal could lead to increased investor confidence and further stock appreciation. The agreement also highlights the increasing demand for AI technology and the strategic partnerships being formed to capitalize on this trend. This development could influence the broader semiconductor industry, prompting other companies to seek similar partnerships to enhance their market positions.
What's Next?
Investors and analysts will be watching AMD's stock performance closely, particularly the critical price levels identified in technical analyses. The stock's ability to maintain its upward momentum will be crucial, with key resistance levels at $227 and $272. Additionally, support levels at $174 and $150 will be monitored for potential pullbacks. The success of this deal could lead to further strategic partnerships for AMD, potentially expanding its market share in the AI sector. The broader impact on the semiconductor industry could include increased competition and innovation as companies strive to meet the growing demand for AI technologies.
