Why AMD shares are rallying on Tuesday?
Advanced Micro Devices AMD shares continued their rally on Tuesday, with fresh details of the chipmaker's financial ties with Anthropic further boosting sentiment.
AMD shares rose around 5% in morning trading, following a surge of more than 13% on Monday. The stock cooled off towards midday and was trading roughly 2% higher at the time of writing.
Why are AMD shares rising today?
The latest advance came after Anthropic's regulatory filing disclosed that AMD would participate in a $26 billion private placement alongside some of the world's largest technology companies.
The development strengthens AMD's position in the artificial intelligence infrastructure market. The Nvidia rival is emerging as both a hardware supplier and an investor in one of the industry's fastest-growing AI companies.
Anthropic's IPO filing revealed that AMD has agreed to purchase approximately $2.5 billion worth of its Class N shares as part of a broader private placement.
It also involves Google, Nvidia, Broadcom, Micron, Microsoft and Taiwan Semiconductor Manufacturing Co.
The placement by these giants is expected to close alongside Anthropic's IPO.
Importantly, the $2.5 billion purchase is part of an existing commitment rather than an entirely new investment.
AMD and Anthropic first announced their strategic partnership in July, when AMD committed to purchase up to $5 billion of Anthropic shares under a hardware supply agreement.
The partnership involves Anthropic deploying up to 2 gigawatts of AMD's Instinct MI450 Series GPUs through its Helios rack-scale systems.
The first gigawatt of capacity is expected to begin deployment in the first half of 2027.
Anthropic officially launched its IPO roadshow on Tuesday, offering 825 million shares of Class A common stock at an expected price range of $70 to $78 per share.
The company has applied to list on the Nasdaq under the ticker symbol ANT.
Monday's momentum helping
The latest development builds on a strong rally on Monday, when Oppenheimer upgraded AMD to Outperform from Perform and assigned a $600 price target.
Analyst Rick Schafer cited accelerating demand for AMD's data center processors and artificial intelligence accelerators, projecting that data center revenue could grow 135% in 2027.
The brokerage expects AMD's EPYC server processors, alongside its MI455 AI chips and Helios systems, to drive the next phase of growth. It also sees AI GPU sales overtaking EPYC server CPU revenue next year.
AMD also announced that its fifth-generation EPYC processors would power the host infrastructure for Google Cloud's new TPU 8tx system, which offers hardware-enforced confidential computing for sensitive AI workloads.
The partnership expands AMD's presence beyond its own GPUs, positioning its server processors as an important component of computing systems built around Google's custom AI chips.
Nvidia weakness provides opportunity
AMD's gains also came as Nvidia shares remained under pressure amid the controversy surrounding CEO Jensen Huang's extramarital affair with a suspected Chinese agent.
An independent investigation has been launched by the company's board even as Huang retains his position as the CEO.
AMD is Nvidia's key rival, and investors could turn attention toward it as an AI chip alternative.
Nvidia declined nearly 6% around midday, while the broader S&P 500, Dow Jones and Nasdaq were all lower.
AMD’s gains are watched by investors who update their positions through top online trading platforms.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.