Shares of Advanced Micro Devices (NASDAQ:AMD) surged on Wednesday, with the stock up 11.2% at its peak. News that Alphabet's (NASDAQ:GOOG)(NASDAQ:GOOGL) Google plans to add AMD's Radeon-based FirePro server GPUs to its cloud platform in 2017 seems to be the main driver. The stock had settled a bit by 2:45 p.m. EST, up about 9.25%.
AMD is playing catch-up to rival NVIDIA (NASDAQ:NVDA) when it comes to cloud computing. NVIDIA has been focused on getting its Telsa GPUs into cloud data centers for years, and the company recently announced a blowout third quarter featuring a tripling of its data-center revenue. NVIDIA's GPUs are already available for users of Amazon Web Services, Microsoft's Azure, and IBM's cloud platform.
Beginning in 2017, AMD's FirePro S9300 x2 server GPUs, the company's most powerful, will be used to accelerate Google Compute Engine and Google Cloud Machine Learning services. Possible use cases include medical and financial simulations, machine learning, and video rendering and transcoding.
"The adoption of AMD GPU technology in Google Cloud Platform is a validation of the progress AMD has made in GPU hardware and our Radeon Open Compute Platform, which is the only fully open source hyperscale GPU compute platform in the world today," Said Raja Koduri, SVP and chief architect, Radeon Technologies Group, AMD. "We expect that our momentum in GPU computing will continue to accelerate with future hardware and software releases and advances in the ecosystem of middleware and libraries."
It's important to note that Google will also be adding NVIDIA's Tesla P100 and K80 GPUs to its cloud platform next year, so this isn't bad news for NVIDIA. For AMD, it represents tangible progress in the company's effort to become a major player in the accelerator market. NVIDIA's GPUs remain far more prevalent among cloud-computing providers, but this is a step in the right direction for AMD.
Still, a 10% jump in the stock price seems excessive. No details on the quantity of GPUs were given, so it's unclear exactly how big of a deal this is. Given Google's choice to add GPUs from both companies, this is as much a win for NVIDIA as it is for AMD.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Timothy Green owns shares of IBM. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon.com, and Nvidia. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.