Why AMD Stock Is Down Today
Key Points
AMD stock is falling as a midterm victory for Democrats sets off a sell-off in chip stocks, with investors worried about a clampdown on the AI industry.
AMD reported third-quarter sales up 45% to $13.4 billion with Data Center revenue nearly doubling, yet chip stocks are on track for their worst week since the tariff meltdown.
If data center moratoriums are put in place in key states like Texas, Ohio, and Georgia, the AI capex that has fueled AMD's growth could slow.
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Advanced Micro Devices (NASDAQ:AMD) stock is down 15.1% as of 2:38 a.m. ET on Thursday, Nov. 5, after a midterm victory for Democrats set off a sell-off in chip stocks.
The S&P 500 (SNPINDEX:^GSPC) and the Nasdaq Composite (NASDAQINDEX:^IXIC) are down 3.9% and 5.0%, respectively.
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Why AMD stock is falling in the chip stock sell-off
Two days after the momentous election, investors are dumping chipmakers, worried that a Democratic Congress will clamp down on the AI industry. The risk to the data center build-out is actually greater at the state level: new governors in Texas, Ohio, and Georgia campaigned partly on data center moratoriums. These are key states for AI construction.
Image source: AMD.
If these moratoriums are put in place, the AI capex flows that have fueled the extreme growth of AMD and other chipmakers could slow.
The iShares Semiconductor ETF (NASDAQ:SOXX) is down 7.5% so far today.
AMD earnings were strong, but data center timing is the question
AMD reported its Q3 results on Tuesday afternoon, with sales up 45%, hitting $13.4 billion. Data Center revenue nearly doubled. The question investors are asking is whether the data centers that buy AMD's chips get built as fast as everyone planned. And if that happens, how does AMD keep growing at the pace investors have come to expect?
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and iShares Trust - iShares Semiconductor ETF. The Motley Fool has a disclosure policy.
