AMD Stock Rises on News of Microsoft Cloud Partnership

Microsoft and AMD team up to challenge NVIDIA in AI Chip market

by Sededin Dedovic
AMD Stock Rises on News of Microsoft Cloud Partnership
© AMD / YOutube channel

The American software company Microsoft has announced that it plans to offer its cloud service customers a platform based on AMD's artificial intelligence (AI) chips in order to compete with the much larger rival company NVIDIA, reports Reuters.

Microsoft plans to present more details at the developer conference, Microsoft Build, scheduled for next week. The company will also review new custom processors called Cobalt 100. Microsoft's clusters of AMD's sophisticated MI300X AI chips will be sold through Azure cloud services.

These will provide an alternative to the much more widespread NVIDIA H100 graphics processors (GPUs) that dominate the AI data center chip market, where demand exceeds supply. To create AI models or run applications, companies typically need to connect—or cluster—multiple chips because data and computing operations cannot fit on a single processor.

AMD, which expects about $4 billion in revenue from AI chips this year, has said that its chips are powerful enough for training and running large AI models. In addition to the top NVIDIA AI chips, Microsoft offers its customers access to its own AI chips called Maya.

Moreover, the Cobalt 100 processors that Microsoft plans to introduce next week offer 40% better performance than other processors based on Arm Holdings technology, according to the company. Snowflake and other companies have already started using them.

The Cobalt chips, which were announced in November, are being tested to run Teams, Microsoft's messaging tool for business users, and are positioned to compete with the internally developed Graviton chips produced by the world's largest cloud service provider, Amazon.

Shares of Advanced Micro Devices (AMD) rose on Friday following a report that Microsoft (MSFT) plans to offer its cloud computing customers a platform based on AMD artificial intelligence chips as an alternative to systems running Nvidia (NVDA) chips.

AMD stock looked set to reclaim a key level on the news, reports Investors. On the stock market today, AMD stock climbed 1.1% to close at 164.47. Earlier in the session, it had risen as much as 4.4% to 169.72. With the move, AMD stock returned to near its 50-day moving average line, a key support level.