Shares of Advanced Micro Devices Inc. (NASDAQ:AMD) gained recently on news that Alphabet’s (NASDAQ:GOOGL) Google will use its 7 nanometer chips in its cloud computing servers. According to Jefferies analyst Mark Lapacis, the new agreement with Google is quite a coup for AMD, as the cloud server chip sector is a $25 billion a year market.
This is a big boost for the company and, undoubtedly, is responsible for generating renewed investor enthusiasm. After the March 21 announcement, the stock was up over 8% for the day. In the short span between Feb. 28 and April 5, AMD shares rose 23%; the stock is up an impressive 57% year to date.
The company also benefited after Google announced on March 21 that it would be using AMD’s graphics processing chips for its streaming video game service called Stadia. The stock shot up 12% that day on the news, adding a hefty $2.8 billion to its market cap.
What accounts for the stock’s dramatic climb?
A number of positive factors have recently coalesced, causing renewed interest by analysts impressed with the company’s product pipeline for 2019. Advanced Micro Devices achieved a significant milestone. Last year, the company introduced its 7 nanometer-based Rome server chips in the second half; smaller nanometer chips are more powerful. The rollout is a major turning point for the company as this product, for the first time ever, will