AMD bets the UK can propel it into the trillion dollar club

Advanced Micro Devices, aka AMD, has announced building a cluster of AI supercomputers with a commitment of 2 billion investment in the United Kingdom. The plan will take shape in the course of the next five years as the American chipmaker hopes to reach a trillion dollar valuation. 

AMD (NASDAQ: AMD) made the announcement on Monday at London Tech Week. The company said the money would go toward several UK programs, including two supercomputers.

The company has called one of them “Zenith”. It will be built at the University of Cambridge. The second one, called “Sunrise”, is being developed alongside the UK Atomic Energy Authority and will focus entirely on nuclear fusion research.

Fusion is a form of energy generation that works by replicating the reactions found at the core of the sun. Scientists believe it could one day produce near-unlimited clean energy. Sunrise, once complete, will be the most powerful computer in the world, built specifically for fusion research.

AMD chief executive Lisa Su said the company intended to “expand access to the compute infrastructure needed to advance sovereign AI” in Britain.

Shares slide 11% before Monday bounce

Even under Nvidia’s (NASDAQ: NVDA) shadow, AMD’s stock (NASDAQ: AMD) still managed to roughly double in value this year.

The perseverance also shows in the recent action. Last Friday, shares fell nearly 11% in a single session. The reason wasn’t AMD itself but Broadcom’s (NASDAQ: AVGO) quarterly results as reported by Cryptopolitan previously. The results, while being solid, did not raise its long-term AI revenue forecast.

Still, investors across the sector got spooked enough, resulting in a broad sell-off of chip stocks.

However, AMD has already started recovering from the recent losses. Shares are up around 2% before the market opened, leading to a 4% gain. Nasdaq futures rose 0.67% and S&P 500 futures gained 0.26% in the same period.

The Friday drop turned into a buying opportunity for some investors.

As Jeff Kilburg, chief executive of KKM Financial, told CNBC that his firm had trimmed its AMD position ahead of the decline and was now watching for a moment to buy back in. He acknowledged that semiconductor stocks had become overheated but said the wider AI trend remained intact.

AMD’s announcement in London came on the same day that Prime Minister Sir Keir Starmer confirmed the government would begin purchasing AI chips from British start-ups.

Speaking at London Tech Week, Starmer said he planned to use “the power of public procurement” to back homegrown tech firms, with £400 million earmarked for AI chips to build what he called a “national capability.” His broader message was clear: he wants British tech companies to “start here, scale here and stay here.”

Profits jump 95% as data centers drive growth

Adding further, investors can’t ignore AMD’s own numbers.

The company reported total revenue of $10.2 billion in the first quarter of this year, a 38% rise compared with the same period last year. Net profits jumped 95% over the same stretch.

The business is split into three segments. The smallest, Embedded, brought in $873 million, up 6% year on year. The Client and Gaming division generated $3.6 billion, a 23% increase. But it is the data center arm that has become the real engine of AMD’s growth. That segment pulled in $5.8 billion during the quarter, a 57% rise year on year, and now makes up more than half of total company revenue.

Because data center sales are growing much faster than the other two divisions, analysts expect it to take up an even larger share of AMD’s income going forward. If that happens, the company’s overall growth rate could accelerate beyond the 38% it posted in Q1.

AMD has also been busy locking in major commercial relationships. Earlier this year, it struck a $60 billion deal to supply chips to Meta, with the social media company taking a stake in AMD as part of the arrangement. OpenAI signed a similar deal last year, one that could give it up to a 10% stake in the company.

With a current market value of around $850 billion, AMD needs less than a 20% rise in its share price to cross the trillion-dollar threshold.

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