Why Advanced Micro Devices Stock Bounced Back Today
Key Points
AMD plans to invest £2 billion to grow Britain's AI and quantum industries over five years.
Research funded by the investment will use AMD chips and software, boosting AMD sales.
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Advanced Micro Devices (NASDAQ: AMD) stock got caught in an epic sell-off last week as semiconductor chip stocks lost $1 trillion in market capitalization. AMD stock, in particular, lost 9.6% by the close of the week.
The semiconductor chips giant bounced back this morning, however, with shares rising an even 5% through 11 a.m. after AMD announced it will invest £2 billion (that's $2.7 billion) in artificial intelligence research in the United Kingdom.
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AMD + U.K. = what?
Through investments with the Imperial College London and Oriole Networks (a computer networking start-up), AMD intends to boost advanced computing, scientific research, and workforce development across the United Kingdom -- not just in AI, but in quantum computing and other "next-generation computing research," says the company. Additionally, AMD is partnering with Dell Technologies (NYSE: DELL) and the University of Cambridge to work on the latter's Zenith AI supercomputer and Sunrise fusion AI system.
AMD's total investment in these projects could (not necessarily will) reach $2.7 billion over the next five years, and one goal is to help turn the U.K. into a "global AI superpower."
This goal isn't entirely altruistic, however. As AMD explains, some of its funding will be used to purchase AMD compute platforms and AMD AI software as well -- so a big part of AMD's goal here is to grow its market share in the U.K.
What's next for AMD?
Not that AMD necessarily needs much help growing. The company's most recent earnings release showed 38% revenue growth and profits up nearly double -- 95%, year over year.
Still, more growth wouldn't hurt and, indeed, could go a long way toward justifying AMD's 155-times earnings valuation. If AMD can goose its growth rate for just $500 million-ish per year, it will be money well spent.
Should you buy stock in Advanced Micro Devices right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices. The Motley Fool has a disclosure policy.
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