- AMD's graphics-processing unit was chosen to run Google's new streaming-video-game platform.
- The presence of AMD CEO Lisa Su at Tuesday's developer's conference could be a sign the two companies will work more closely in the future.
- Watch AMD trade live.
AMD was the biggest winner on Tuesday, spiking 12%, after Google unveiled Stadia, its plan to upend the video-game industry.
At its developers' conference on Tuesday, Google formally announced it would use AMD's graphics-processing units for its new cloud-based gaming platform Stadia. The new streaming platform will allow gamers to play anywhere they can access Google's Chrome web browser.
And while Tuesday's announcement that Google would use AMD GPUs for Stadia was already known, Jefferies analyst Mark Lapacis said the formal announcement of the partnership was enough to support the stock.
More importantly, however, he thinks the attendance of AMD CEO Lisa Su at Tuesday's event signals the two companies could work even more closely in the future.
He says the "conspicuous absence of Intel from the announcement suggests a close relationship between AMD and Google and the increasing likelihood that Google will ultimately announce that it will use AMD EPYC 2 server MPUs."
A deal between Google and AMD on servers would be more important than the GPU announcement for gaming because it represents a $25 billion-a-year market, according to Lapacis. He says the consensus only sees AMD grabbing 10% of that market over the next 12 to 24 months.
As for Tuesday's 12% spike, which catapulted shares to their best level since October, Ihor Dusaniwsky, managing director of predictive analytics at the financial technology and analytics firm S3 Partners, says the move looked like "a FOMO rally with buyers looking to get in before they miss the early and chunky profits."
He noted that the sell-off in shares of video-game console makers Nintendo and Sony, which both lost more than 4.5%, suggests that chipmakers, and particularly AMD, "may be one of the big winners in this technology."
AMD was up 41% this year through Tuesday.
