Why AMD Stock Is Surging Thursday Afternoon

Advanced Micro Devices Inc AMD shares spiked Thursday afternoon following reports that Microsoft Corp MSFT is helping finance AMD's foray in AI.

What To Know: According to Bloomberg, Microsoft, which is heavily invested in OpenAI's ChatGPT, is helping finance AMD's expansion into AI processors. 

The report indicates that the two companies are joining forces to offer an alternative to Nvidia Corp's NVDA market-leading AI chips. Microsoft will reportedly provide financial support and also collaborate with AMD on a Microsoft processor for AI, code-named Athena.

The news comes a day after AMD CEO Lisa Su said the chip company is making a "big bet" on the generative AI boom in an interview on CNBC's "Squawk On The Street."

"We're putting AI into every aspect of our product portfolio," Su said, adding AMD plans to launch its first AI PCs later this year. 

Check This Out: Are AMD Investors Ringing The Register Too Soon? AMD CEO Sees Improving Inventory And Demand, Says Company Is Making 'Big Bet' On AI

What Else Is Going On: AMD reported better-than-expected quarterly results after the close on Tuesday, but investors latched on to weak guidance as shares fell in reaction to the print. 

The company said it was in the midst of a "mixed demand environment," but it was not expected to last. Longer term, AMD saw significant growth opportunities in data center and embedded, as well as in accelerated adoption of artificial intelligence. 

Several analysts adjusted price targets on the stock on Wednesday with most firms setting targets well above current levels.

AMD Price Action: AMD shares were up 9.58% at $89.45 at the time of writing, according to Benzinga Pro.

Photo: courtesy of AMD.