What Happened?
Shares of computer processor maker AMD (NASDAQ: AMD) jumped 6% in the afternoon session after the stock's positive momentum continued as cloud company Oracle announced plans to use 50,000 of the company's advanced AI chips and multiple analysts raised their price targets.
Oracle detailed its plans to expand its AI cloud services by using AMD's 'Instinct MI450 Series' graphics processing units (GPUs) starting in the third quarter of the next year. Adding to the positive sentiment, several analysts expressed increased confidence in the stock. Wedbush maintained an 'Outperform' rating and increased its price target from $190 to $270. Similarly, HSBC maintained a 'Buy' rating and lifted its price target to a Street-high of $310. These actions followed other recent positive updates, including an upgrade from Wolfe Research and a price target increase from Mizuho. Broader strength in the semiconductor sector also provided a lift, as chip equipment maker ASML reported better-than-expected income.
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What Is The Market Telling Us
AMD’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates 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 5 days ago when the stock dropped 5.9% as President Donald Trump threatened to impose 'massive' new tariffs on Chinese goods.
President Donald Trump's threat of "massive" new tariffs on Chinese goods sent shockwaves through the market, directly impacting chipmakers like Nvidia and AMD. Trump noted China's tightening controls on rare earth metals, which are vital components in many technology products from electric vehicles to defense systems. Compounding the pressure, Beijing has reportedly initiated its own countermeasures. These include tightening export controls on crucial raw materials such as rare earths and launching an antimonopoly investigation into chip giant Qualcomm. Furthermore, reports indicate that Chinese customs officials are now conducting stringent checks on semiconductor shipments arriving at ports, specifically targeting certain high-end chips. This escalating back-and-forth creates significant uncertainty for the semiconductor industry, which relies heavily on complex global supply chains and access to international markets, leading to a broad sell-off across the sector.
AMD is up 95.7% since the beginning of the year, and at $236.04 per share, has set a new 52-week high. Investors who bought $1,000 worth of AMD’s shares 5 years ago would now be looking at an investment worth $2,839.
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