AMD’s latest round of quarterly results reminded investors that not all chipmakers are going to see Nvidia-like growth amid the artificial intelligence boom.
The chipmaker said it expects revenue in the current quarter to be between $5.4 billion and $6 billion, in line with Wall Street’s estimate of $5.7 billion.
But shares fell nearly 9% on Wednesday, indicating that the in-line report may not be enough for AI investors after AMD stock rose more than 70% in the past year.
In particular, Wall Street analysts noted that the outlook for AI development within AMD may not be as strong as some had expected.
In a note that lowered his price target from $195 to $185, Bank of America research analyst Vivek Arya wrote that AMD bulls may have been disappointed by the company’s forecast for Mi300 chips in 2024, which came in at $4 billion. Despite the increase from the prior guidance of $3 billion, Arya said he lacked a more optimistic outlook for a range of $5 billion to $6 billion.
This contrasts with Nvidia’s (NVDA) recent run of AI dominance, where the company has consistently surprised Wall Street’s lofty expectations.
“We believe NVDA’s vertical integration into systems/software will continue to make AMD difficult to beat,” Arya wrote.
Wedbush analyst Matt Bryson argued that the price reaction in AMD led investors to fail to see “the forest through the trees” in the AI story.
But AMD’s move mirrored other declines in chipmaker shares on Wednesday, pointing to a slowdown in investor enthusiasm around the AI business, especially in names that have surged heavily in the past year.
Shares of Super Micro Computer (SMCI), which are up more than 700% in the past year, fell more than 14% on Wednesday after the company reported quarterly revenue of $3.85 billion – below Wall Street’s estimate of $3.95 billion, but Still reflecting about it. An increase of 200% compared to the same period a year ago. The company raised its full-year revenue guidance to a range of $14.7 billion to $15.1 billion, up from an earlier range of $14.3 billion to $14.7 billion.
Still, news from both companies led to declines in the broader chip sector, with the Philadelphia Semiconductor Index (^SOX) falling more than 3.5% on Wednesday.
The moves speak to a broader trend Citi strategist Drew Pettit told Yahoo Finance he expects to see a surge this quarter in sectors like semiconductors, where stock valuations have soared recently.
“You don’t just need to beat (earnings and revenue estimates) and stick to (guidance), you need to beat and raise and have confidence in the long-term trajectory of these companies,” Pettit said.
Josh Schafer is a reporter for Yahoo Finance. follow him on x @_joshschafer,
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