Why Advanced Micro Devices Skyrocketed 24% in July – The Chip War Heats Up
Advanced Micro Devices (AMD) just pulled off a July to remember—shares surged 24% as the semiconductor underdog bit back.
The catalyst? A perfect storm of demand and defiance.
While rivals scrambled, AMD’s next-gen chips carved through market skepticism like a 5nm wafer. Data centers, gaming rigs, and yes—crypto miners—snapped up inventory. (Because nothing screams ‘hedge against inflation’ like a warehouse full of GPUs.)
Wall Street blinked. Then bought.
Short sellers got flattened as earnings projections shifted from ‘meh’ to ‘take my money.’ Meanwhile, Intel’s roadmap hiccups turned AMD’s tech into the belle of the ball.
One cynical footnote: The rally conveniently aligned with peak ‘AI hype cycle’ rhetoric. Coincidence? Or just another case of Silicon Valley’s favorite game—‘musical chairs with valuation multiples’?
AI stocks get a boost from Trump and increased demand
Artificial intelligence stocks generally had a pretty good month in July. All of the big cloud hyperscalers increased their outlooks for capital expenditures going to AI data centers, and AMD will undoubtedly be a beneficiary of this as it seeks to become a trusted second source behind Nvidia.
The positive AI sentiment also probably got a boost from the TRUMP administration's midmonth unveiling of its "AI Action Plan." While there were several aspects to the 30-page plan, it appears to mostly be a deregulatory document aimed at speeding up the approval and construction of AI data centers.
AMD saw some of the fruits of this de-regulation on July 15, when the Commerce Department apparently told AMD that it WOULD soon approve shipments of the company's MI308 AI chip to China. Like Nvidia's H20, the MI308 is AMD's toned-down version of its Instinct GPU for the Chinese market. AMD had warned last quarter that the restrictions of the MI308 could cost the company up to $800 million in writedowns. But now, AMD is set to realize that revenue, which is also likely to come at high margins.
Image source: Getty Images.
Finally, South Korean news outlet Newsis reported that AMD has raised the price of its Instinct MI350 AI accelerator from $15,000 to $25,000, good for a 67% increase. Although the hasn't confirmed it yet, if true, the price increase could indicate increased demand for the Instinct at major cloud companies. Up until now, AMD may have had to cut prices for major AI customers to try the Instinct over Nvidia's Blackwell chips.
The price increase apparently shows that there's enough demand for Instinct and its price-performance characteristics. While the Instinct systems are still probably priced at a discount to Nvidia's Blackwell, the price increase seems to show AMD is more confident about Instinct's competitiveness.
AMD reports today
Investors will get more information when AMD reports earnings after the close today. Analysts expect revenue of $7.43 billion and earnings per share of $0.48, good for 27% and 30% growth, respectively.
The stock has had a great run off the April lows, more than doubling to trade at 44 times this year's earnings estimates. So it may be difficult for AMD to top those lofty expectations, at least in the NEAR term.
