Key Takeaways
- Advanced Micro Devices spearheaded a $350 million investment round for cloud startup TensorWave, which operates solely on AMD processors
- The funding round establishes TensorWave’s valuation at $1.55 billion, with ambitions to reach two gigawatts of data-center infrastructure
- This strategy parallels Nvidia’s approach with CoreWeave and Nebius, prompting concerns about circular investment patterns
- Shares of AMD declined 3.4% during premarket hours Wednesday as chip stocks broadly retreated
- Wall Street maintains a Moderate Buy rating on AMD shares with a consensus price target of $419.86
Advanced Micro Devices has taken the lead in a $350 million financing round for TensorWave, a Las Vegas-headquartered cloud infrastructure provider that operates exclusively with AMD processing technology, according to a Wednesday report from the Wall Street Journal. The transaction establishes TensorWave’s enterprise value at $1.55 billion.
Advanced Micro Devices, Inc., AMD
Shares of AMD began Wednesday’s session at $475.51 but tumbled 3.4% in early trading as semiconductor stocks experienced widespread pressure.
This strategic investment closely mirrors the approach taken by Nvidia, which has provided capital to emerging cloud providers — specifically CoreWeave and Nebius — that deliver AI-focused computing infrastructure powered by Nvidia’s graphics processing units.
Such arrangements have attracted scrutiny from market analysts who characterize them as examples of “circular financing” — a pattern where chip manufacturers funnel capital to companies that subsequently use those funds to purchase hardware from the original investor.
Morningstar analyst Brian Colello observed: “Nvidia’s partnership and investment with CoreWeave is…circular, or perhaps more of a web.”
The scale of AMD’s initiative remains considerably smaller than Nvidia’s comparable ventures. TensorWave currently holds agreements for 500 megawatts of data-center infrastructure, with plans to expand to two gigawatts within the next twelve months. In comparison, CoreWeave has already deployed over one gigawatt of capacity and aims to exceed five gigawatts by the end of the decade.
Colello further commented: “Anyone scarred by the dot-com bubble bursting is keenly aware of the risks of a circular deal…we don’t think this risk is present today…but it bears watching.”
Wall Street Outlook and Institutional Holdings
Financial analysts maintain a generally positive stance on AMD. The semiconductor company holds a Moderate Buy consensus rating, with analysts projecting an average share price of $419.86.
Morgan Stanley adjusted its price objective upward from $360 to $410 in May while maintaining its equal weight stance. Sanford C. Bernstein elevated AMD from market perform to outperform status and increased its target from $265 to $525. Benchmark set a new target of $485 alongside a buy recommendation, while Citigroup raised its projection to $460 with a neutral outlook.
Institutional investors control 71.34% of outstanding shares. Deutsche Bank expanded its AMD holdings by 35,432 shares during the fourth quarter, bringing its aggregate position to 9,124,413 shares valued at approximately $1.95 billion.
Executive Stock Transactions and UK Investment Initiative
Chief Executive Officer Lisa Su divested 125,000 AMD shares on May 13th at a weighted average price of $445.51, generating proceeds of approximately $55.7 million. This transaction, executed through a pre-established Rule 10b5-1 trading arrangement, reduced her ownership stake by roughly 3.97%.
Executive Vice President Paul Darren Grasby similarly sold 24,376 shares in early May at an average price of $444.39. Company insiders collectively disposed of 332,032 shares valued at approximately $118 million during the most recent three-month period.
In more favorable developments, AMD revealed plans to invest up to £2 billion in the United Kingdom over a five-year timeframe to advance artificial intelligence initiatives, establish research collaborations with prestigious institutions such as Imperial College London and the University of Cambridge, and enhance professional training programs.
AMD’s latest quarterly performance showed earnings per share of $1.37, surpassing the analyst consensus of $1.29. Total revenue reached $10.25 billion, exceeding the $9.90 billion projection, representing a 37.8% increase compared to the same period in the previous year.
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