Advanced Micro Devices (AMD) shares climbed nearly 2% following the announcement of an expanded strategic alliance with enterprise AI specialist Cohere. This move is seen as a direct effort by AMD to carve out new revenue streams in the intensely competitive artificial intelligence chip market. The partnership raises questions about whether it can sufficiently counterbalance recent challenges the company has faced.
Financial Performance and Geopolitical Headwinds
Despite the positive market reaction to the Cohere news, AMD continues to navigate a complex landscape. The company reported record second-quarter 2025 revenue of $7.7 billion, representing a significant 32% year-over-year increase. However, this strong performance is tempered by the impact of US export restrictions on AMD’s Instinct MI308 chips to China. These restrictions have resulted in an accumulation of $800 million in inventory, contributing to a noticeable decline in profitability.
The collaboration with Cohere appears to be a strategic component of AMD’s broader plan to diversify its customer base. The focus is shifting away from geopolitically sensitive markets and toward securing enterprise AI clients on a global scale.
Deepening Ties with Cohere
On September 24, the two companies confirmed the extension of their collaboration. The entire suite of Cohere’s AI models will now be optimized to run on AMD’s Instinct GPU infrastructure. The integrated portfolio includes:
* The Command A model series
* Command A Vision capabilities
* Command A Translate tools
* Full integration with the North platform
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A notable aspect of the deal is that AMD will also deploy Cohere’s North platform internally to power its own corporate AI operations. This internal adoption signals a strong vote of confidence in the partnership and is intended to create operational synergies between the firms.
Positioning in the Sovereign AI Market
A key growth area targeted by this alliance is the emerging market for sovereign AI systems. As governments worldwide increasingly prioritize technological independence and data security, AMD is positioning itself with Cohere’s security-focused models as a trusted provider for both public sector and corporate needs. Vamsi Boppana, Senior Vice President of AI at AMD, highlighted the energy efficiency of the joint solution as a critical advantage for businesses accelerating their AI adoption.
Year-to-date, AMD’s stock has surged more than 33%, substantially outperforming the Nasdaq 100 index, which is up 17%. The central question for investors remains whether this strengthened partnership can effectively bolster AMD’s long-term competitive stance against industry leader NVIDIA.
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