Advanced Micro Devices Inc. shares rose 2% on Thursday amid reports of the company's plans to tap the corporate bond market for its largest-ever investment-grade debt offering. According to Bloomberg, the size of the offering remains flexible and could adjust depending on investor appetite. The positive market reaction reflects investor confidence in AMD's ability to secure funding for its AI expansion strategy. AMD stock has gained 133% year-to-date, significantly outperforming broader semiconductor markets, though recent trading patterns show some caution with the stock closing at $483.01 yesterday, roughly double its April price. The rally has been accompanied by protection buying and money outflows, with hedge funds trimming AMD positions while adding to Nvidia holdings.
Advanced Micro Devices Inc. is planning to raise as much as $5 billion in what would be the chipmaker's biggest-ever US dollar investment-grade bond sale, according to reports from Business Standard and Bloomberg. The debt offering comes as AMD ramps up spending to meet surging demand for computing capacity driven by the AI boom. No final decision has been made on the offering's size, which could change based on demand, according to people familiar with the matter. The semiconductor manufacturer is facing immense pressure to scale up capital expenditures, secure raw material pipelines, and construct high-density data center architecture as global enterprises and cloud providers scramble to integrate generative AI directly into their daily workflows.
AMD is selling notes in four tranches, with maturities ranging three to 10 years, as reported by Business Standard. Initial price talk on the longest tenor is a yield premium of 1.15 percentage points over Treasuries, according to a person familiar with the matter. The company has committed to invest as much as $5 billion in Anthropic as part of the agreement with the Claude chatbot maker, demonstrating its significant AI investment strategy. The offering is being organized by six major financial institutions, led by Barclays, Bank of America, Citigroup, JPMorgan Chase, Morgan Stanley, and Wells Fargo.
The debt offering comes as AMD recently finalized strategic agreements with Microsoft Corp. and Anthropic PBC that will broaden the use of its AI chips, according to Business Standard. Under its agreement with Anthropic, the creator of the Claude AI system, AMD has pledged to invest up to $5 billion. Earlier this February, Meta announced a multi-year, multi-generation strategic partnership with Advanced Micro Devices to deploy up to 6 gigawatts (GW) of AMD Instinct GPUs across its global data center footprint. These partnerships are part of AMD's strategy to capitalize on the growing AI computing demand and accelerate the rollout of its hardware across major cloud and enterprise platforms.
Despite AMD's strong fundamentals and Bank of America's bullish outlook on the $210 billion AI server CPU market by 2030, options positioning reveals some market caution. The AMD stock put-to-call open interest ratio has climbed to 1.15, meaning more bearish contracts are outstanding than bullish ones, while the daily volume ratio sits at 0.85. This contrasts sharply with Nvidia's setup, where the open interest ratio reads 0.83 and volume ratio just 0.52, indicating calls dominate the flows. Money flow data confirms the split, with AMD's 20-day Chaikin Money Flow reading -0.142, the weakest among 10 major chip names, while Nvidia, Broadcom, TSMC, and Qualcomm all show accumulation. TipRanks data shows Nvidia carrying a Smart Score of 9 (Outperform) versus AMD's 6 (Neutral), with hedge funds adding 15.1 million Nvidia shares last quarter while cutting 4 million AMD shares.
