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Advanced Micro's (AMD +3%) roughly $665 mln cash purchase of Silo AI is spurring healthy buying activity today as shares move to their best levels since early April, before Q1 numbers triggered a sell-off. The energetic response to AMD's acquisition of an AI-related organization underpins a sustained appetite among investors for all things AI. While returns on the technology have yet to be meaningful, the market is more than willing to buy in now in anticipation of explosive growth down the line.

AI will remain the center of attention heading into earnings season, which kicks off later this week. Big tech firms are trying to outspend each other in a race to be the dominant leader in AI. AMD's battle is currently with NVIDIA (NVDA), whose GPUs, including its upcoming Blackwell platform, have remained the top choice among tech giants building their AI infrastructure. However, AMD has typically found itself in second place to NVIDIA, not a bad place to be if AI turns out to be as lucrative as many expect.

• Still, AMD is not complacent in staying at number two. By agreeing to acquire Silo AI, which bills itself as Europe's largest private AI lab, working with every vertical from automotive to energy, AMD plans to meaningfully fortify its AI business.
• Silo AI was founded in 2017 and has since been engaging in developing tailored AI models. Some of its past customers include Unilever (UL), where Silo developed an ML tool to improve packaging efficiency, and Intel (INTC), which used Silo's quality control technology.
• With experience in working with a major chip designer and manufacturer in Intel, Silo AI appears to be a solid fit for AMD. The lab will likely work side by side with AMD integrating AI rapidly into its products, possibly leading to future performance gains over NVIDIA, perhaps at lower price points.

Even with AI in the experimentation phase, companies are turning to the technology in order to not be left behind competitively if AI takes off in a significant way. The chip designers, including NVDA, AMD, and INTC will each be competing for a slice of the AI pie, and any minor advantage could translate to considerable financial gains. By agreeing to add Silo AI to its business, AMD is taking the necessary step toward grabbing a potential advantage against its peers. Whether the purchase will ultimately result in a healthy return on investment has yet to be seen. However, sitting by is not an option for chip makers during such an AI-related frenzy.