AMD Pulled between Riot Platforms Contract and 25% Tariff
Trump's adminstration imposed 25% tariffs on some AMD products as the company made a deal for data centers.
Quick overview
- AMD stock rose 1.72% after signing a 10-year contract with Riot Platforms for data centers.
- The Trump administration announced a 25% tariff on all imported semiconductors, including AMD's products.
- Despite the tariff concerns, AMD is preparing for future growth with upcoming quarterly earnings and a positive market outlook.
- Analysts predict a 44% growth for AMD over the next five years, supported by the expanding AI market.
On Friday, Advanced Micro Devices (AMD) stock rose 1.72% on news that the company had signed a 10-year contract with Riot Platforms, but the company is also facing steep tariffs.
The Trump administration announced that all imported semiconductors will be taxed with 25% tariffs. These include the H220 chip from Nvidia and AMD’s MI324X chips. The purpose of the tariff is to drive the semiconductor business to local companies in the United States, strengthening the market there.
AMD stock climbed despite the new tariff announcement, though, thanks to an agreement with Riot Platforms for the company’s data centers. Riot will provide AMD with data centers for the next decade, with the option to extend the agreement further. This should meet AMD’s immediate growth and production means as they expand their market share.
The New Contract Came at the Right Time
AMD will be releasing their quarterly earnings in a few weeks, and they are set to show shareholders that they have provided for their future needs and are well prepared to take advantage of their market position. The company’s stock is at $231.80 as the Monday holiday continues.
Once Tuesday signals the start of market trading for the shortened week, AMD stock could falter, though. The announcement of new tariffs is bound to hurt the company’s bottom line as well as their future earnings prospects. The company could also suffer from news that Trump has begun a trade war with several European nations that he plans to levy tariffs against unless Greenland is given to the United States.
The agreement between AMD and Riot Platforms comes at a time when AI-related companies like AMD are focused on expansion and meeting increasing data storage and processing needs. AMD now has to convince its shareholders that it can be profitable in this market- a market that has suffered from severe criticism over excess spending and minimal profits in recent months.
The AI-related companies Nvidia (NVDA) and Taiwan Semiconductors (TSM) have managed to quiet naysayers who think the future of the AI market is in jeopardy. With strong earnings and decent profits, these companies show that it is possible to be extremely successful in what is becoming an expensive tech niche. AMD may be able to pull off the same victory, though, since it has been given a $270 price target by some analysts and is expected to see around 44% growth over the next five years.
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