What happened

Shares of Advanced Micro Devices (AMD -3.46%) rallied today, up by 6% as of 3:40 p.m. EDT, after the company announced that Alphabet (GOOG -1.98%) (GOOGL -1.96%) subsidiary Google had picked AMD's newest data center chip to launch a new service.

So what

The two technology companies have partnered to utilize AMD's third-generation EPYC processors to power a new family of Tau virtual machines (VMs) within Google Cloud. Tau VMs will extend Google Cloud's existing VM services with a new offering that is designed to be deliver cost-effective performance of scale-out workloads.

Rendering of AMD EPYC chip

Image source: AMD.

The search giant says AMD's EPYC chips deliver significantly better performance than anything offered by rival cloud providers. Google claims that the first instance of the Tau VM, known as T2D, will enjoy 56% higher absolute performance and 42% higher price performance compared to general-purpose VMs. AMD EPYC processors also support x86 compatibility so customers don't need to tweak their applications for other processor architectures.

Now what

"At Google Cloud, our customers' compute needs are evolving," Google Cloud CEO Thomas Kurian commented in a release. "By collaborating with AMD, Google Cloud customers can now leverage amazing performance for scale-out applications, with great price-performance, all without compromising x86 compatibility."

The Tau VMs will become available in the third quarter, and Google notes that a 32vCPU VM with 128GB of memory will be priced at $1.352 per hour for on-demand usage in the U.S.