AMD spikes after Amazon makes a big bet on its new processors

In this Sept. 10, 2007 file photo, a staff technician presents a 300 millimeter chip wafer at Advanced Micro Devices Inc. (AMD) in Dresden, eastern Germany.AP Photo/Matthias Rietschel

• AMD held a “Next Horizon” event on Tuesday, unveiling its 7-nanometer graphics products and microprocessors.
• During the event, AMD said Amazon will use its new processors for Amazon Web Services.
• That will give some Amazon Web Service customers lower prices for their cloud services. 
• Watch AMD trade live.

AMD was rallying on Tuesday, up 7%, after Amazon said it would use AMD’s new line of processors for its cloud business.

During AMD’s “Next Horizon” event, the chipmaker unveiled its 7-nanometer graphics products and microprocessors, and said it was partnering with Amazon Web Services (AWS) to provide new general purpose (M5 and T3) and memory-optimized (R5) instance types with AMD EPYC processors that are 10% less expensive than the current M5, T3, and R5 instances.

Simply put, the agreement will give some customers lower prices for their Amazon cloud services.

The AMD-based instances provide additional options for customers who are looking to achieve cost savings on their Amazon EC2 compute environment for a variety of workloads, such as microservices and virtual desktops, Amazon said in a press release.

“One thing our customers agree on is that they all like lower prices,” said Matt Garman, vice president of AWS in a statement.

“Apart from adding to what is already the broadest and most capable set of compute services available in the cloud, these new AMD-based instances give customers an even lower priced way to run many of the most common applications.”

While Amazon showed confidence in AMD’s new 7nm data-center products, Morgan Stanley analyst Joseph Moore was bearish about the new lineup ahead of the event.

“Based partly on feedback from AMD, we wanted to be clear that EPYC 2 will not be shipping for revenue until next year (which has been our expectation), and calling this a product launch is probably an overstatement,” Moore said. He has a sell rating and price target of $17 for AMD — 15% below where shares were trading.

AMD was up 94% this year.

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