Advanced Micro Devices Attacks Nvidia With New Acquisition

Advanced Micro Devices AMD announced today that the company appears to be further drawn into the AI conversation. Specifically, the semiconductor maker announced that it has agreed to buy Silo AI for $665 million, accelerating its vision of creating new software and services to complement its AI chips and hardware.

Experts believe this push is a direct insult to industry leader Nvidia NVDAthat has dominated the high-performance semiconductor market in recent years. With Silo AI, Advanced Micro Devices will have access to people with solid AI skills and experience delivering AI solutions to high-end customers. Investors are clearly liking it, sending AMD shares nearly 3% higher in early afternoon trading.

AMD shares surge after AI acquisition announcement

Nvidia’s market leadership remains solid. However, AMD is among the main competitors looking to carve out a growing customer base in this space.

The company’s announced acquisition of Silo AI should help AMD challenge Nvidia on the innovation front. For end users to realize significant long-term benefits, this competition should be healthy and encouraging. In many ways, it could make both players better in the long run (and that’s perhaps a silver lining for Nvidia investors). It’s worth noting that both stocks are higher today.

Ultimately, I think it’s worth considering this announcement in terms of AMD’s commitment to continue to invest heavily in its AI chips. It’s more of a statement to investors than something that will move the needle in the short term. For now, investors seem happy with this demonstration of Silo AI’s intent and potential to take AMD to the next level.

As of the date of publication, Chris MacDonald did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are the author’s own, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication of this article, the editor in charge did not hold (directly or indirectly) any interests in the securities referred to in this article.

Chris MacDonald’s love of investing led him to pursue an MBA in Finance and a series of executive positions in corporate finance and venture capital over the past 15 years. His background as a financial analyst, combined with his passion for finding undervalued growth opportunities, contribute to his conservative, long-term investment perspective.