Advanced Micro Devices Inc (NASDAQ: AMD) shares closed Tuesday trading at $109.01, up 1.91 percent from the day’s opening price, with the gains extending in the after-hours trading session. The AMD shares uptick on Tuesday was attributed to the Nod.ai acquisition for an undisclosed amount in a bid to enhance its artificial intelligence capabilities.

According to the announcement, the acquisition of Nod.ai will entail its team members joining AMD to further develop AI solutions amid heightened demand. Moreover, AMD intends to play catchup with Nvidia Corp (NASDAQ: NVDA) which has scaled to a $1.2 trillion valued tech company in the past year.

Why the Nod.ai Acquisition by AMD Matters

According to Vamsi Boppana, the company’s senior vice president of the artificial intelligence group, the acquisition of Nod.ai will significantly enable its customers to easily tap into high-performance AI models that are interoperable with AMD hardware products.

“The addition of the talented Nod.ai team accelerates our ability to advance open-source compiler technology and enable portable, high-performance AI solutions across the AMD product portfolio. Nod.ai’s technologies are already widely deployed in the cloud, at the edge, and across a broad range of endpoint devices today,” Boppana noted.

Similar sentiments were expressed by the Nod.ai team of engineers that has focused on developing AI solutions with notable backing from crucial investors including  8Square Capital, Atlantic Bridge, Pointguard Ventures, and Walden International.

“Our journey as a company has cemented our role as the primary maintainer and major contributor to some of the world’s most important AI repositories, including SHARK, Torch-MLIR, and OpenXLA/IREE code generation technology. By joining forces with AMD, we will bring this expertise to a broader range of customers on a global scale,” Anush Elangovan, co-founder and CEO of Nod.ai, noted.

Market Outlook

During the fiscal second-quarter earnings that were released in early August, AMD said that it is increasing its research and development in the AI sector to widen its revenue collection base. Moreover, the company expects AI to be a significant PC demand driver as large software companies incorporate generative AI into their offerings. During the quarter, AMD announced that its clients’ sales dropped by about 54 percent YoY to $998 million. However, the acquisition of Nod.ai is expected to stir things up in the coming quarters.

Notably, AMD recently introduced the MI300X chip to incorporate new AI models like ChatGPT from OpenAI. Additionally, the company’s chips are also included in the latest gaming console like the Sony PlayStation 5. Nonetheless, the overall sales in the gaming division dropped by about 4 percent during the fiscal second quarter to $1.6 billion on an annualized basis. Overall, the company’s revenue dropped by about 18 percent YoY to $5.36 billion, hence the need to diversify its portfolio.

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Key Takeaways

• The balance of Bitcoins on exchanges is in constant decline, now at the lowest point since December 2017 
• Meanwhile, long-term investors continue to hold, soaking up the supply
• Coins that have not been touched in 10 years now outnumber those held on exchanges 

I wrote a piece last week on the exodus of stablecoins from exchanges, with the balance currently the lowest since October 2021, with 45% of the total balance of stablecoins on exchanges flowing out in the last four months. 

But the glut in liquidity is not limited to stablecoins. The world’s biggest cryptocurrency is also seeing funds flow out. Only 11.8% of the total Bitcoin supply is currently on exchanges – that is the lowest since December 2017. 

To jot your memory, December 2017 was the previous bull market peak. Bitcoin rose to within a hair of $20,000 before freefalling into a two-year-long bear market which ravaged the entire industry.

Since January 2020, exchanges’ reserves of Bitcoin have been only going one way: down. It hints at the demand/supply imbalance that so many Bitcoin truthers advocate for, with the much-vaunted hard supply cap of 21 million coins for Bitcoin. 

If demand keeps rising, they argue, the price can only go up because supply cannot keep up. 

Central to this thesis is the resilience of long-term holders to keep a firm grasp on their bitcoins. And when assessing whether they have, the answer is a resounding yes. 

The below chart presents long-term holders against the total exchange balance. In November 2022, the number of bitcoins last active 10+ years ago overtook the number of bitcoins on exchanges. 

Of course, some of these long-term holders will be lost coins, either via their owner dying or losing their private keys. 

But the stat is still interesting and speaks to the cohort of (very) early investors in Bitcoin who remain clinging to their coins with all their might. Remember, this includes the anonymous Satoshi Nakamoto, who is estimated to hold over 1 million coins, or 5% of the total supply. 

Below is the chart displaying the current portion of the Bitcoin supply split out by time held and compared to the exchange balance. 

The result is interesting, but even more so when considering that the last three years brought both the euphoric highs of Bitcoin at nearly $70,000 during the pandemic and then the bone-crushing fall through 2022, which saw it careen down towards $15,000. 

In terms of the long-term trajectory of Bitcoin, it’s undoubtedly bullish. Of course, it all depends on whether the demand for additional Bitcoin will hold up. The supply may be getting squeezed, but that is all for nothing if the demand side doesn’t hold up its end of the bargain. 

And on that note, the last year has been a big blow. Not only has capital flowed out of the space at an alarming rate, but a number of very high-profile scandals (LUNA, Celsius, FTX and so on) have rocked the space. The fear is that these episodes have dented the reputation of the cryptocurrency space and will inhibit the demand for Bitcoin on the intuitional side. Have people been put off moving into the space?

It’s hard to say. But in looking at long-term holders, their confidence seems resolute.