AMD Will Develop ‘Gaming Optimized Chips' for Microsoft's Next Xbox
Advanced Micro Devices (AMD) stock rallied on Friday after the semiconductor company revealed it's working with Microsoft (MSFT) on the development of the next Xbox. In this announcement, AMD CEO Lisa Su said the company will create 'gaming optimized chips' for use in the new Xbox.
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According to Su, this new partnership goes beyond AMD's previous work with Microsoft. That includes, 'Combining the power of Ryzen and Radeon for consoles, handhelds, PCs, and the cloud.' The AMD CEO also noted that these chips are being made with backward compatibility in mind, allowing gamers to enjoy titles from previous Xbox generations.
News of its partnership with Microsoft was a boon to AMD stock on Friday. The company's shares got a 1.43% boost, extending its year-to-date gain of 6.55%. However, the stock is still down 21.36% over the past 12 months. Today's rally also saw 32.6 million shares change hands, compared to a three-month daily average of 42.93 million units.
Microsoft's Surprise Reveal
Investors have also noted a surprising reveal in the Microsoft and AMD Xbox announcement. During the announcement, Xbox President Sarah Bond said the game company seeks to create an Xbox experience that isn't tied to a single device or store.
This statement fueled speculation that Microsoft might allow more stores on Xbox. There have already been rumors that Steam and the Epic Games Store could be added to the console. If this happens, it would open the way for PC gamers to play their games on Microsoft's game console.
When this bit of information was pointed out by a user on X, formerly Twitter, the official Xbox account replied with a wide-eyes-looking-to-the-side emoji. While that isn't a confirmation, it does add to the evidence of other storefronts coming to Xbox devices.
AMD and MSFT: A Match Made in Heaven?
Investors might see today's announcement as a reason to buy stakes in AMD and Microsoft. Wall Street would agree with that sentiment. The analysts' consensus estimate for AMD is Moderate Buy, while Microsoft sports a consensus Strong Buy rating. A $129.93 price target offers a potential 1.35% upside for AMD, while a $516.14 price target for MSFT suggests a possible 7.65% upside.
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