AMD stock rallies on tie-up with Google to build game streaming platform

For investors of Advanced Micro Devices (AMD), there seems to be a lot to cheer about this week. A day after Apple (AAPL) launched its revamped iMacs featuring AMD’s graphics processors, shares of the chipmaker gained sharply Tuesday following reports of its partnership with Google (GOOG, GOOGL) for the cloud gaming project.

After unveiling the cloud-based game streaming platform Stadia at the Game Developers Conference in San Francisco Tuesday afternoon, the search service giant confirmed that the graphics will be powered by AMD processors.

The stock has been on an uptrend since morning when Morgan Stanley said AMD was making early gains by teaming up with Google, citing the huge potential the cloud-based gaming technology offers semiconductor companies. According to the analyst, innovation helped AMD grow its market across all segments, though its graphics technology is not as appealing as those developed by others, including Nvidia (NVDA) which is specialized in graphics chips.

The stock has been on an uptrend since Morgan Stanley said AMD was making early gains by teaming up with Google

The analyst, meanwhile, retained the underweight rating on AMD and reaffirming the $17 price target. Going by the intense speculation surrounding Google’s entry into the multi-billion dollar gaming space, the tie-up could come as a major boost to AMD. Earlier, the California-based microprocessor manufacturer had announced its association with Google’s Project Stream program, which is said to be the basis of the cloud gaming initiative.

At the launch event, Google CEO Sundar Pichai claimed that the Stadia controller developed by the company would allow users to play games on any device from any location. The cloud platform, supported by Google’s large data centers, offers a high-resolution gaming experience that is accessible to all computing devices – from conventional PCs to advanced smartphones.

Cloud gaming is touted as the next big thing in digital entertainment, considering its ability to reach a wider audience and to overcome the limitations of the PC/console gaming technology. Meanwhile, AMD is yet to comment on the matter.

Shares of AMD made significant gains soon after the market opened Tuesday, and traded higher by more than 8% as trading progressed. Over the past 12 months, the stock more than doubled, outperforming the sector. It moved up 32% so far this year.

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