AMD Shares Jump 6% after Report that Microsoft Ordered AI Chip Development

Advanced Micro Devices Inc (NASDAQ: AMD) saw its shares edge higher on Thursday after a report that it has collaborated with Microsoft Corporation (NASDAQ: MSFT) on the development of an artificial intelligence (AI) chip. According to the latest stock market data from Tradingview, AMD shares closed Thursday trading at $86.61, up 6.11 percent from the day’s opening price. As a result, AMD shares have gained about 33.72 percent YTD to trade around $87.23 during Thursday’s after-hours session.

Reportedly, Microsoft is funding AMD through the initiative to develop a super-efficient special-purpose Artificial Intelligence (AI) chip. Bloomberg noted that Microsoft and AMD are working on an artificial intelligence (AI) chip with a code name Athena.

AMD and Microsoft on AI Development

The emergence of artificial intelligence has significantly disrupted the Web2 industry with companies like Chegg reporting low customer turnover. Already, OpenAI’s ChatGPT-4 has attracted global attention thus pushing Silicon Valley tech giants to focus on AI and cloud network development. Moreover, OpenAI has grown to a billion-dollar company, currently valued at approximately $29 billion.

Currently, Microsoft is closely working with OpenAI through Azure AI supercomputing technologies. This collaboration is meant to broaden the use of artificial intelligence as they encompass large programming language models. Meanwhile, Microsoft and its partners continue to work round the clock to deliver on high demand for advanced AI infrastructure and training models.

“This infrastructure included thousands of NVIDIA AI-optimized GPUs linked together in a high-throughput, low-latency network based on NVIDIA Quantum InfiniBand communications for high-performance computing,” Microsoft noted.

Advanced Micro Devices, on the other hand, is reportedly working with other tech giants like Google and Oracle Corp (NYSE: ORCL) on similar AI chips. Furthermore, the development of Web3 technologies is meant to scale through artificial intelligence (AI) powered infrastructure.

According to Nidhi Chappell, Microsoft’s head of product for Azure high-performance computing, the key to AI breakthrough is to understand how to interconnect high-throughput GPUs on a low-latency InfiniBand network. Moreover, training large language models requires thousands of GPUs working together at scale with high optimization.

“This is not something that you just buy a whole bunch of GPUs, hook them together and they’ll start working together. There is a lot of system-level optimization to get the best performance, and that comes with a lot of experience over many generations,” she added.

Market Outlook

The need for artificial intelligence is immense, especially in rebuilding most global economies after the Covid-19 downtime. Moreover, most industries have scaled through online businesses and require fast and efficient cloud systems that meet the high demand. As a result, tech companies are competing to build the next-generation AI chips to win more global markets.

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