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AMD shares surge 16% after Google and Twitter say they're using the chipmaker's new processor

Key Points
  • AMD has a minuscule share of the data center chip market, but it's expected to grow rapidly in the coming years.
  • Twitter said that by using AMD's new processor it will save cut down costs related to its infrastructure by 25%.
  • AMD shares are up 84% this year.
Lisa Su, president and chief executive officer of Advanced Micro Devices (AMD), holds a 3rd generation Ryzen desktop processor while speaking during a keynote session at the 2019 Consumer Electronics Show (CES) in Las Vegas, Jan. 9, 2019.
David Paul Morris | Bloomberg | Getty Images

Advanced Micro Devices jumped 16% on Thursday after the semiconductor manufacturer said Google and Twitter are using the company's newest data center processors.

At an event in San Francisco on Wednesday afternoon, AMD announced the launch of the second generation of its EPYC chips designed for high-performance uses like in the cloud or inside large enterprises. It's a business dominated by Intel, which controls about 98% of the market, but where AMD is looking to rapidly expand. According to a recent report from Atlantic Equities, AMD's share of the data center market should grow to 25% in a decade from 2% last year.

Google said that it's deployed the upgraded EPYC processors internally and next year will add them to its cloud engine that's used by other companies to run workloads. Twitter announced that, because of the power reductions that come with the new chips, it plans to reduce costs related to data center infrastructure by 25%.

"Twitter is committed to reducing our environmental impact of our datacenters by finding innovative ways to increase efficiency," Jennifer Fraser, senior director of engineering at Twitter, said in the press release. With the EPYC processors, "we can scale out our compute clusters with more cores in less space using less power," she said.

Other companies that say they're using AMD's new processors or offering them to customers include Microsoft, which is previewing the chips in some of its Azure cloud offerings, Hewlett Packard Enterprise, Lenovo and Dell.

AMD shares closed at $33.92 on Thursday and are up 84% this year, while Intel shares are virtually flat. However, in the chipmaker's latest earnings release last month, it reported a 13% decline in revenue from the prior year and lowered its full-year forecast, in part because of a slide in demand for processors used in gaming consoles. The stock dropped 10% on the report.

WATCH: AMD CEO Lisa Su on second-quarter earnings

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AMD CEO Lisa Su on second-quarter earnings and revised 2019 guidance