TLDR
- AMD led a $350 million funding round for TensorWave, a cloud start-up that runs exclusively on AMD hardware
- TensorWave is now valued at $1.55 billion and is targeting two gigawatts of data-center capacity
- The move mirrors Nvidia’s investments in CoreWeave and Nebius, drawing “circular financing” criticism
- AMD stock was down 3.4% in premarket trading on Wednesday amid a broader chip-stock selloff
- Analysts hold a Moderate Buy consensus on AMD with an average price target of $419.86
AMD led a $350 million funding round for TensorWave, a Las Vegas-based cloud-computing start-up that runs entirely on AMD hardware, the Wall Street Journal reported Wednesday. The deal values TensorWave at $1.55 billion.
Advanced Micro Devices, Inc., AMD
AMD stock opened at $475.51 on Wednesday and was down 3.4% in premarket trading as a broader chip-stock selloff weighed on the sector.
The investment is a direct play from Nvidia’s playbook. Nvidia has backed so-called “neoclouds” — CoreWeave and Nebius — that provide cloud-computing capacity for AI workloads using Nvidia hardware.
Those deals drew criticism from some analysts who called them “circular financing” — money flowing from the chip company to a start-up that then spends it buying chips from that same company.
Morningstar strategist Brian Colello wrote: “Nvidia’s partnership and investment with CoreWeave is…circular, or perhaps more of a web.”
AMD is operating at a much smaller scale than Nvidia here. TensorWave has leases for 500 megawatts of data-center capacity, with a target of two gigawatts over the coming year. CoreWeave already has over one gigawatt active and is targeting more than five gigawatts by 2030.
Colello also noted: “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.”
Analyst Targets and Institutional Interest
Wall Street remains broadly constructive on AMD. The stock carries a Moderate Buy consensus, with an average price target of $419.86.
Morgan Stanley raised its target from $360 to $410 in May, keeping an equal weight rating. Sanford C. Bernstein upgraded AMD from market perform to outperform and lifted its target from $265 to $525. Benchmark raised its target to $485 with a buy rating, and Citigroup moved its target to $460 with a neutral rating.
Institutional ownership sits at 71.34% of the stock. Deutsche Bank increased its AMD position by 35,432 units in Q4, bringing its total to 9,124,413 units worth around $1.95 billion.
Insider Selling and AMD’s UK Commitment
CEO Lisa Su sold 125,000 units of AMD stock on May 13th at an average price of $445.51, totaling roughly $55.7 million. The sale was made under a pre-arranged Rule 10b5-1 plan and reduced her position by about 3.97%.
EVP Paul Darren Grasby also sold 24,376 units in early May at an average price of $444.39. Insiders have sold a combined 332,032 units worth approximately $118 million over the past quarter.
On the positive side, AMD announced a commitment of up to £2 billion over five years in the UK to support AI innovation, research partnerships with institutions including Imperial College London and the University of Cambridge, and workforce development.
AMD’s most recent quarterly earnings came in at $1.37 EPS, beating the $1.29 consensus. Revenue hit $10.25 billion, above the $9.90 billion estimate, and was up 37.8% year over year.
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