Why AMD stock price is soaring today

stock advanced micro devices (AMD 7.82%) It was up 7.4% as of 1:45 PM ET today, according to data from S&P Global Market Intelligence. meantime, nvidiaThe stock price rose 2%.

Nvidia may be AMD’s biggest competitor in the artificial intelligence (AI) race, but positive news about the company tends to boost other top AI players. Nvidia’s stock is on the rise today thanks to optimistic reports from analysts and partnership news, and those gains are having a ripple effect on AMD.

Nvidia’s optimistic news boosts AMD

No company has a greater impact on the valuation of AI stocks than Nvidia. Nvidia’s graphics processing units (GPUs) have become the foundational hardware powering the artificial intelligence revolution, and favorable developments for AI leaders are often interpreted as positive signals for other companies exposed to technology trends. Therefore, even though the company is a stronger competitor in the GPU market, Nvidia’s favorable developments often have the effect of boosting AMD’s stock price.

Citing promising trends in the AI ​​space, Tigress Financial analyst Ivan Feinseth issued a bullish note on Nvidia stock yesterday. The analyst reaffirmed his Buy rating and raised his one-year price target from $790 to $985 per share.

Following a price target increase, Rail Vision today announced it will join Nvidia’s Metropolis platform for machine vision technology and use technology from the GPU leader to improve the safety and efficiency of rail travel. A win over a competitor may not seem like a favorable development for AMD at first, but the overall adoption of AI technology signals widespread opportunity for the technology.

What’s next for AMD?

The midpoint of AMD’s guidance for the first quarter calls for revenue of approximately $5.4 billion. If the company hits that target, sales would be roughly the same as what it posted in the first quarter of last year. Meanwhile, AMD is driving non-GAAP (adjusted) gross margin to 52%, up from 50% in the year-ago period.

AMD has yet to see a significant revenue boost from the rise of AI. That doesn’t mean a significant performance improvement won’t arrive at some point, but investors should keep in mind that the stock’s 140% gain over the past year has been driven primarily by future expectations. Explosive sales and profit growth drove Nvidia’s growth.