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Advanced Micro Devices (AMD) - Get Free Report shares extended gains Wednesday after Alphabet (GOOGL) - Get Free Report said the chipmaker's Radeon GPUs, as well as its developer tools, will be used in Google's new video game streaming service Stadia.

AMD will provide its custom-made chip for the Google Stadia rollout, along with software development tools and an open-sourced Vulkan driver, as it seeks to keep pace with rival Nvidia's NVDA GeForce Now cloud gaming service. AMD CEO Lisa Su told investors in January that datacenter and GPU growth were key to the company's improved earnings guidance.

"We've worked closely with AMD for years on this project, leading to the development of a custom GPU with leading-edge features and performance for Google Stadia," said Google's head of Stadia development Dov Zimring. "Google and AMD share a commitment to open-source with expertise in Vulkan, open-source Vulkan GPU drivers, and open-source graphics optimization tools."

"We're humbled by the spirit of innovation and collaboration that exists throughout the gaming industry and look forward to pioneering the future of graphics technology with game developers, in open-source," he added.

AMD shares were marked 2.7% higher at the opening bell Wednesday, following yesterday's surge of 11.8% that put the stock at the top of the S&P 500, and were changing hands at $26.65 each. The move extend the stock's year-to-date gain to 43% and values the Santa Clara, California-based group at around $27 billion.

Google shares were marked 0.1% lower at $1,202.90 after EU antitrust regulators fined parent Alphabet €1.49 billion ($1.7 billion) for unfairly restricting rivals from displaying ads on its platform via third parties using its AdSense tool.

Stadia, which was unveiled during the annual Game Developers' Conference yesterday in San Francisco, will allow players to instantly join games they view on YouTube via a "Play Now" button in the corner of the screen. Games will be available to play on desktop computers, laptops, tablets, TV sets and phones without requiring a console.

"Cloud gaming is one of the key themes we highlighted for interactive entertainment. We think it has potential to drive a few massive shifts in the games industry," said KeyBanc Capital's Evan Wingren, who cited the potential for a larger addressable market of players, a shift in the distribution of value in the video game content with a new deliver system and an acceleration in competitive gaming trends. 

Google has also made a custom Stadia Controller that connects directly via Wifi to a Stadia game-playing session; it will have one button to share content with other users, and another to connect with Google Assistant.

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