Tech company AMD has seen an instant bump in shares after Amazon said that it will be using AMD’s new processors for its Amazon Web Services (AWS) arm.
The news immediately buoyed AMD shares, which rose 7%. AMD, which stands for Advanced Micro Devices, has slowly been making inroads into the market in recent years and has now usurped rival Intel to win the AWS contract.
AMD confirmed the news at the Next Horizon event on Tuesday as it displayed microprocessors and graphics cards just seven nanometers thick.
Amazon is pushing ahead with its cloud operations through AWS as it looks to capitalize on current market trends. Many industry experts have suggested in recent months that most businesses will be cloud-based to some degree over the next decade, with hybrid cloud mechanisms and services likely to be in high demand.
Given IBM’s acquisition of Red Hat last week, tech giants are all looking to make serious inroads while there are still gaps in the market.
This is good news for AMD, who announced it while releasing its new general purpose and optimized chips, all of which are 10% cheaper than their current iterations. With a downward price movement as well as gains in performance and efficiency, it is little wonder that AWS felt that now was the perfect time to get involved.
In turn, this allows AWS to offer its clients lower prices, which is set to place it at a competitive advantage. AWS VP Matt Garman echoed these sentiments by saying: ‘One thing our customers agree on is that they all like lower prices.’
Amazon confirmed in a press release that the savings could well apply to everything from microservices to desktops run virtually due to the wide range of applications that AMD chips can accommodate.
Garman said that ‘apart from adding to what is already the broadest and most capable set of compute services available in the cloud’, AMD’s products could draw in even more customers with more affordable prices.
However, not all analysts have declared this a huge success for AMD. Morgan Stanley’s Joseph Moore remains unconvinced.
He said that given the circumstances around the actual products’ release, which will be in late 2019, it is not necessarily accurate to call this a product launch, labeling it ‘an overstatement.’ Moore said his price target is only $17, coming in at 15% lower than the current share price after today’s boost.
Meanwhile, Amazon has announced that it will no longer be building an all-encompassing HQ2 – its second headquarters to equal its Seattle base – and will be splitting it up into two locations. One is rumored to be in New York, with talks set to be close on securing venues in Queens, Long Island City, and Arlington, Virginia.
Given that Amazon billed its HQ2 plan as ‘a full equal to our current campus in Seattle,’ its change of plans will be a surprise to many and is not likely to come with the same promises in terms of levels of investment and the number of jobs created in the chosen destinations.