Microsoft Corp. is working with Advanced Micro Devices Inc. on the chipmaker’s expansion into artificial intelligence processors, according to people with knowledge of the situation, part of a multipronged strategy to secure more of the highly coveted components.

The companies are teaming up to offer an alternative to Nvidia Corp., which dominates the market for AI-capable chips called graphics processing units, said the people, who asked not to be identified because the matter is private. The software giant is providing support to bolster AMD’s efforts, including engineering resources, and working with the chipmaker on a homegrown Microsoft processor for AI workloads, code-named Athena, the people said.