AMD falls as investors seek bigger AI payoff

Advanced Micro Devices(AMD) shares fell premarket 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.

SpaceX’s decision to build its computing infrastructure exclusively on rival Nvidia chips dealt ​another blow to the stock, which was last down 8.8% at $473, ​set to shave more than $74 billion off its market value.

The decline underscores the ⁠elevated expectations AMD faces, and serves as a reminder that winning high-profile customers ​remains critical as it seeks to boost its competitive position against 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.

SpaceX CEO Elon Musk said Nvidia’s Vera Rubin was “the best architecture”. Shares of ​the AI bellwether gained 1.9% in premarket trading.

Santa Clara, California-based AMD 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 stock was facing a “very high bar” following recent AI-related customer announcements and the sharp rally ​in the shares, ​despite “objectively good” results ⁠and forecast.

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

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.

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.