AMD falls as investors demand bigger AI payoff

Advanced Micro Devices' shares plummeted 6.6% after a disappointing revenue forecast failed to meet investors' expectations, erasing nearly $59 billion from the company's market value.

Advanced Micro Devices shares tumbled on Wednesday as the chipmaker's revenue forecast failed to impress investors ‌seeking clearer signs that a multibillion-dollar AI spending boom will translate into faster growth. Shares were last down 6.6% at $482.53, set to erase close to $59 billion from the company's market value.

AMD's stock was also hit by SpaceX's ‌CEO Elon Musk's decision to build the company's computing infrastructure exclusively with rival Nvidia's chips. Shares of the ‌AI bellwether gained 3.3% in early trading. AMD's decline lays bare the elevated expectations from the company, which signed deals last month with Anthropic and Core Scientific, to win high-profile customers and close the gap on Nvidia and Intel. "We suspect expectations had moved higher ⁠following ​Intel's results a couple of ⁠weeks ago, and the buyside already has a fairly bullish outlook," said Stacy Rasgon, analyst at Bernstein.

The Santa Clara, California-based firm forecast third-quarter ⁠revenue of about $13 billion, plus or minus $300 million, above analysts' estimates of $12.52 billion, according to data compiled by LSEG. Analysts ​at TD Cowen said AMD faced a "very high bar" after recent AI-related customer wins and a ⁠sharp rally in its shares, even though its results and forecast were "objectively good".

J.P.Morgan analysts said supply constraints remain a risk, with projects ⁠concentrated ​on TSMC's N3 process and CoWoS chip-packaging technology likely to face tightness through 2027. Chief Executive Lisa Su said AMD expects data-center revenue to more than double by 2027 and projected revenue growth ⁠above its previously outlined target of more than 35%. AMD's data-center revenue more than doubled to $6.72 billion, topping expectations.

AMD's ⁠stock has more than ⁠doubled this year on expectations that the company will emerge as the leading alternative to Nvidia in AI chips, raising the ante for quarterly results.