2016 has been a pretty good year for AMD (AMD) , one that has seen sales stabilize and perceptions of the long-struggling chipmaker change for the better in fields including PC and server CPUs, PC GPUs and console processors. Friday's news of an alliance with Alibaba (BABA) stands to improve perceptions of AMD's standing in another market -- server GPUs -- one that has long been dominated by Nvidia (NVDA) .
Alibaba, which in addition to being an e-commerce giant is a major player in the Chinese cloud infrastructure market, plans to use AMD GPUs based on the chipmaker's Radeon Pro technology platform (it's meant for server and workstation graphics cards) within its servers to "help expand its cloud computing offerings." AMD closed up 4% on the news, and is up 135% on the year.
Details about the partnership are limited for now. AMD does note, though, it's showing off an Alibaba cloud server containing AMD's FirePro S7150 x2 GPU at a Chinese conference. AMD claims the solution is the industry's only hardware-virtualized GPU solution, something that allows hardware resources to be dedicated to up to 32 separate users.
Use cases are said to include remote workstations and virtual desktops, which involve hosting PCs and workstations (and remotely accessing their resources) on centrally managed servers. Cloud gaming and cloud computing workloads will also be supported.
This is a field where Nvidia's GRID GPUs have been the biggest player. The GPU giant has alliances with top virtual desktop software vendors Citrix Systems (CTXS) and VMware (VMW) , as well as with a slew of major server manufacturers. Nvidia's total data center GPU revenue, which also covers sales of its Tesla GPUs -- they're often used to handle high-performance computing and artificial intelligence workloads -- rose 110% annually in the company's July quarter to $151 million.
A deal with Alibaba certainly isn't enough by itself to take Nvidia's crown in this market, but it does give AMD a needed boost to its profile. And with Alibaba's cloud computing division on a $700 million-plus annual revenue rate and still growing at a triple-digit clip, it could prove lucrative in time.
It's worth noting the Alibaba deal follows an April agreement with Chinese firm THATIC to create a joint venture that will develop server CPUs for the local market. From the looks of things, AMD has managed to get into Beijing's good graces.
AMD's turnaround story still has its share of question marks. For example, Nvidia practically has the high-end PC GPU market to itself for the time being, and -- though they appear to be impressive at first glance -- it remains to be seen just how much lost market share AMD's upcoming Zen PC and server CPUs will let the company regain against Intel (INTC) .
Nonetheless, AMD's product momentum and public image are both in much better shape than they have been in years. And markets have definitely noticed.