Advanced Micro Devices (AMD) shares advanced 3% on Friday, riding a broader technology rally fueled by weaker-than-expected US employment data that dampened prospects for another Federal Reserve interest-rate hike. The September nonfarm payrolls report showed the economy added just 29,000 jobs, while the unemployment rate ticked up to 4.2%. Economists surveyed by Dow Jones had anticipated payroll growth of 84,000 and an unemployment rate holding at 4.1%.
The softer labor market figures pushed Treasury yields lower, with the 10-year yield slipping one basis point to 5.25% and the two-year yield initially declining before flattening. The data reinforced market expectations that the Fed could hold rates steady at its October meeting, a scenario that tends to support demand for growth-oriented technology stocks.
Beyond the macro backdrop, AMD's gains were underpinned by fresh developments in its artificial intelligence infrastructure business. On Wednesday, Hewlett Packard Enterprise (HPE) announced that cloud provider Vultr had placed a $1.2 billion order to deploy AMD's Helios AI rack architecture. Each integrated rack combines 72 AMD Instinct MI455X GPUs with AMD EPYC processors and Pensando Vulcano AI network interface cards, and also incorporates HPE's direct liquid cooling technology and scale-up switching software.
The order underscores AMD's push to supply complete AI infrastructure as demand for computing capacity expands. The Helios architecture brings together AMD's GPUs, processors, and networking technology in an integrated rack system, positioning the company to compete more directly with Nvidia in the data center AI market.
AMD also announced on Tuesday that it had agreed to acquire World Labs for $8.2 billion in an all-stock transaction. World Labs is an AI startup focused on spatial intelligence and three-dimensional world models. Under the deal, its founder and AI researcher Fei-Fei Li will join AMD as executive vice president and chief scientist, reporting directly to CEO Lisa Su.
World Labs develops AI models capable of creating and simulating three-dimensional environments. Earlier this year, Li and Su demonstrated the company's Marble model, which can generate a 3D scene from a small number of images. AMD said the technology could have applications in robotics and other physically grounded AI systems, and that World Labs' research could help it anticipate future AI model requirements and guide processor development.
The acquisition is expected to close later this year, and World Labs will remain separate from AMD's chipmaking business until then. At $8.2 billion, the deal would be AMD's second-largest acquisition, trailing only its approximately $50 billion purchase of Xilinx in 2022.
Wall Street remains broadly positive on AMD. According to WSJ data, analysts currently have a consensus overweight rating on the stock, with 47 analysts issuing overweight or buy ratings and ten holding a hold rating. No sell ratings are listed.
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