AMD falls as investors seek bigger AI payoff

Advanced Micro Devices shares declined 7.4% to $480.28, wiping out $61.1 billion from its market value, as a stronger-than-expected revenue forecast failed to meet lofty investor expectations.

Advanced Micro Devices shares declined before the bell on Wednesday as the chipmaker's stronger-than-expected revenue ‌forecast fell short of lofty expectations and investors sought clearer signs that a multibillion-dollar AI spending boom will translate into faster growth. The shares were last down 7.4% at $480.28, set to wipe ‌out about $61.1 billion from AMD's market value.

The move underscores elevated expectations facing AMD as it ‌aims to challenge Nvidia's dominance amid intensifying competition with Intel racing to regain technology leadership after strong results. "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.

Analysts at TD Cowen called AMD's results and forecast "objectively good" but said the stock was ⁠facing a "very high bar" following recent AI-related customer announcements and the sharp rally in the shares. The Santa ​Clara, California-based company 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.

Investors have more than doubled AMD's stock this ⁠year ​on expectations that the company will emerge as the leading alternative to Nvidia in AI chips, raising the bar for quarterly results. Chief Executive Lisa Su said AMD expects data-center ⁠revenue to more than double by 2027 and projected total 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.

Last month, the company signed deals with Anthropic and Core Scientific to bolster ‌its AI ‌infrastructure ambitions.