Advanced Micro Devices (AMD 2.99%) stock is getting a big boost today thanks to major news for its most important competitor. The semiconductor specialist's share price was up 7.2% as of 11 a.m. ET. Meanwhile, the S&P 500 index was flat on the day, and the Nasdaq Composite index was up 0.6%. The stock had been up as much as 8.5% earlier in trading.
Semiconductor investors are shrugging off news that inflation actually came in higher than expected in June and focusing on a big win for Nvidia. The artificial intelligence (AI) leader has secured permission to sell its H20 processor and other hardware in China, and the development could also be good news for AMD.
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AMD stock rises as Nvidia scores big win
Nvidia said today that it has received assurances from the U.S. government that it will be granted export licenses to sell its H20 processors and other AI-related hardware to China. The news comes after new restrictions were implemented in April that prevented the company's H20 hardware from being sold into the Chinese market without a license.
At the time it seemed very unlikely that the export licenses would be granted, but the Trump administration appears to be making a significant reversal on the issue. The decision to allow Nvidia's H20 processor to be sold to Chinese customers comes after a recent meeting between President Trump and Nvidia CEO Jensen Huang, and it looks to be a major development in wider trade negotiations between the U.S. and China. With Nvidia's H20 processor seemingly on track to receive the necessary export licensing, there's a good chance that AMD's specialized AI processors for the Chinese market will also be given export approval.
What's next for AMD?
Approval to sell its specialized processors in China would be a major positive development for AMD stock. In addition to opening up substantial revenue streams for the company for the batch of AI processors it has already designed to meet specific requirements for export to the Chinese market, easing export restrictions would also seemingly reduce the risk that the sale of lower-end hardware could also be restricted.
While there's still significant risk on the geopolitical front, allowing the sale of capable AI processors to China suggests the potential for a significant improvement in U.S. trade relations. If so, AMD stock could continue to see bullish business-specific catalysts in addition to valuation tailwinds for the broader market.
