Shares of semiconductor manufacturer AMD were up Wednesday after a big stock buyback authorization. Here's what that means.

AMD has been lauded as the most formidable competitor to Nvidia's dominance, but the firm now faces tough competition from custom processors and the larger rival's industry stronghold.

AMD said on Wednesday that its board of directors approved $6 billion in share buybacks. The stock climbed 8%. The authorization is in addition to $4 billion in existing approved share repurchases, the company said.