AMD’s (AMD) 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 reported it expects current quarter revenue in a range of $5.4 billion to $6 billion, in line with Wall Street’s estimates for $5.7 billion.
But shares fell nearly 9% on Wednesday, reflecting that in-line reports might not be enough for AI investors after more than a 70% run-up in AMD stock over the past year.
Specifically, Wall Street analysts noted that the outlook for AI growth within AMD might not be as robust as some had hoped.
In a note cutting his price target to $185 from $195, Bank of America research analyst Vivek Arya wrote that AMD bulls might’ve been disappointed in the company’s forecast for MI300 chips in 2024, which came in at $4 billion. While an increase from the prior guide of $3 billion, Arya noted that it felt short of more optimistic outlooks for a range of $5 billion to $6 billion.
This comes in contrast to 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 across systems/software will remain tough for AMD to beat,” Arya wrote.
Wedbush analyst Matt Bryson reasoned the price reaction in AMD was investors failing to see the “forest through the trees” in the AI story.
But AMD’s move mirrored other drops in chipmaker stocks on Wednesday, pointing to a slowdown in investor enthusiasm around the AI trade, particularly in names that have rallied heavily over the past year.
Super Micro Computer (SMCI) shares, which had been up more than 700% over the past year, fell more than 14% on Wednesday after the company reported quarterly revenue of $3.85 billion — short of Wall Street’s estimates for $3.95 billion but still reflecting about 200% growth compared the same period a year prior. The company also boosted its full-year revenue guidance to a range of $14.7 billion to $15.1 billion, up from a prior range of $14.3 billion to $14.7 billion.
Still, the broader chip sector fell on the news from both companies, with the Philadelphia Semiconductor index (^SOX) sliding more than 3.5% on Wednesday.
The moves speak to a broader trend Citi strategist Drew Pettit told Yahoo Finance he expects to emerge this quarter in areas like semiconductors, where stock valuations have recently soared.
“You don’t just need a beat [on earnings and revenue estimates] and hold [on guidance], you need a beat and raise and confidence in the very 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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