Advanced Micro Devices Stock Is Tumbling Today. Here's What You Need to Know

Shares of Advanced Micro Devices (NASDAQ: AMD) were heading lower today after the chipmaker posted disappointing results and guidance in its first-quarter earnings report. As of 2:44 p.m. ET, the stock was down 7.3% after falling as much as 10% earlier in the session.An AI chip in the middle of other circuits

Image source: Getty Images.

Is AMD in trouble?

AMD essentially matched estimates in its first-quarter earnings report. However, investors seemed to want a more bullish forecast on AI chips. Management said it expected to sell $4 billion worth of artificial intelligence (AI) chips this year, but that is still far short of AI leader Nvidia.

Meanwhile, AMD is still struggling with the cyclical slowdown in the semiconductor sector as revenue rose just 2% to $5.47 billion, while adjusted earnings per share improved from $0.60 to $0.62, ahead of estimates by a penny.

AMD reported strong growth in the data center and PC/Client segments, while sales in gaming and embedded, which includes automotive, appliances, and infrastructure, were down sharply.

For the second quarter, the company sees revenue of $5.7 billion, a 4% improvement from the first quarter and up 6% from the quarter a year ago. That forecast was better than the consensus of $5.32 billion but shows AMD is still waiting to experience a significant tailwind from AI.

Why AMD stock sold off

The decline in AMD stock seemed to owe more to its earlier run-up on AI expectations than any major problems in the earnings report. The stock has still more than doubled from the start of 2023, though it's now given back most of its gains from this year. That seems fair, given the latest results and guidance.

AMD still has a lot of potential in the AI boom, as the growth in data center revenue reflects, but investors will have to be patient as the broader business is feeling the impact of an earlier correction in gaming and in the embedded segment.

Should you invest $1,000 in Advanced Micro Devices right now?

Before you buy stock in Advanced Micro Devices, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of April 30, 2024

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.