Shares of Advanced Micro Devices (AMD +7.00%), commonly referred to as AMD, charged sharply higher on Tuesday, gaining as much as 8.7%. As of 1:38 p.m. ET, the stock was still up 8.6%.
The catalyst that sent the semiconductor specialist higher was impressive quarterly results from another crucial player in artificial intelligence (AI) -- Palantir Technologies (PLTR +29.45%).
Image source: The Motley Fool.
The AI boom continues
Palantir reported its most impressive quarterly financial report to date, and investors believe this bodes well for AMD's upcoming results.
In Q2, Palantir delivered revenue that surged 93% year over year to $1.94 billion, driving adjusted earnings per share (EPS) up 156% to $0.41%.
For context, Wall Street's consensus estimates were for revenue of $1.81 billion and adjusted EPS of $0.35, so Palantir sailed past expectations with room to spare.
The company's U.S. commercial segment stole the spotlight, with revenue surging 149% to $764 million, driven by corporate adoption of its Artificial Intelligence Platform (AIP). The U.S. government segment also delivered exceptional results, with revenue of $809 million, which soared 90%.
NASDAQ: AMD
Key Data Points
So, what does this have to do with AMD?
AMD is scheduled to report its second-quarter results after the market close on Tuesday, and investors are betting that Palantir's robust results will translate to a solid quarter for AMD. The semiconductor specialist is guiding for Q2 revenue to rise 46% to $11.2 billion.
Taken together, the evidence highlights the ongoing strong demand for AI. It's worth noting that at 38 times next year's expected earnings, AMD isn't a screaming bargain. However, investors are betting it can wrest share away from industry leader Nvidia, which controls more than 80% of the market for graphics processing units (GPUs) that power AI data centers. With just 6% of the market, AMD has plenty of opportunity to gain share.
