The supply chain crisis continues to pose concerns for production and manufacturing-centric industries. This has been particularly troublesome for companies dependent on electric components. Devices such as semiconductors and microprocessing units are in short supply, but the companies producing them are enjoying significant gains as demand continues to increase. One of the industry’s biggest names has plenty of cause to celebrate today. Advanced Micro Devices (NASDAQ:AMD) has secured a partnership with Meta Platforms (NASDAQ:FB) to provide chips. AMD stock has been in focus since the news broke.
What Happened With AMD Stock
It’s easy to see why a stock like AMD would rally upon the news of a partnership with a Big Tech giant. Meta is on the verge of transforming the industry through metaverse technology, forcing many experts to speculate on what the future looks like for both tech and finance. For a company providing one of its key components, opportunities are abundant.
AMD stock spiked this morning before falling, and shares closed down in the red. Even with these declines, AMD is still up more than 16% for the week with impressive gains of almost 42% for the month. Overall, 2021 has been a very good year for the company, with shares up 95% for the past six months.
This hasn’t been a good day for semiconductor producers across the board. Despite speculation that it could pose a threat to Meta last week, Nvidia (NASDAQ:NVDA) has seen shares fall by more than 1% today.
Why It Matters
There’s no question that securing Meta as a partner is a significant victory for Advanced Micro Devices. Bloomberg reports that the tech giant will be using AMD Epyc processors for its data center computers, an important part of operations as the company shifts to metaverse technology focus. For AMD to be chosen as the chipmaker to help it reach the critical next phase of operations will likely establish it as the dominant name in microchip production.
The recent dip in shares seems to be reflective of a difficult day for the industry in general, not of the company’s stability or growth potential. While the Wall Street Journal recently reported that semiconductor producers were not addressing their field’s long-term problems, Meta clearly didn’t see this as being a reason not to partner with AMD.
While the industry may be in the throws of difficult times for manufacturing, the demand for the products is high and it isn’t going away. Companies like Meta will always be able to pay the most for what they need, thereby creating lucrative opportunities for companies like AMD.
What It Means
In mid-October, InvestorPlace contributor Joel Baglole took a bullish stance on AMD stock, calling for investors to buy it on the dip. He saw a breakout in the stock’s future and less than a month later, we’ve seen exactly that.
If you’re considering a bullish play on semiconductor companies, AMD stock is the current the sector’s breakout stock. Its going to be difficult for competitors to one-up a partnership with Meta.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
