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Why Was AMD Stock Higher Earlier Today?

Following Meta Platforms’ third-quarter results call late Wednesday afternoon, AMD stock (NASDAQ:AMD) gained ground today.

Meta indicated that it will continue existing data center and server investment targets in 2023, which is excellent news for AMD’s data center business. AMD shares rose as much as 4% this morning before falling back.

Concerns about a declining PC market and the possibility that this could lead to disappointing chip sales in the data center industry have sent AMD down 58% this year. Here’s what Meta’s comments imply for AMD in the short run.

AMD Stock: What’s the Deal?

In 2023, Meta expects to invest between $32 billion and $33 billion in data centers, servers, and network infrastructure. The social media behemoth is hurting as advertising dries up, but that isn’t stopping it from investing in technology to construct the future.

Meta stated earlier this year that it was creating the world’s most sophisticated artificial intelligence (AI) supercomputer combining Nvidia and AMD CPUs. AMD announced a 70% rise in sales year over year in the second quarter, driven in part by data center expansion.

So, What Now?

According to Meta’s forecast, major organizations will continue to invest in data center infrastructure in the foreseeable future. However, investors can expect a weaker quarter when AMD publishes profits on November 1.

AMD anticipates a 55% increase in third-quarter revenue year over year. Management anticipates the quarter to be dominated by data center and embedded categories growth, implying decreased demand for consumer desktop processors.

Still, if data center expenditure stays high until 2023, this top chipmaker may have a gentle landing.

Featured Image-  Unsplash @ Syed Ali

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