AMD Shares Slide Despite Strong Revenue Forecast as AI Expectations Rise

Shares of Advanced Micro Devices (AMD) fell as the chipmaker's stronger-than-expected revenue forecast failed to satisfy investors seeking clearer evidence that the multibillion-dollar artificial intelligence spending boom will translate into faster earnings growth, Rashika Singh reported for Reuters.

AMD faces challenges as it seeks to challenge Nvidia's leadership in AI chips while competing with Intel. [Photo: AMD Facebook]

The decline was set to erase more than $61 billion from AMD's market capitalization.

The move highlights the elevated expectations facing AMD as it seeks to challenge Nvidia's leadership in AI chips while competing with Intel, which is attempting to regain its technological edge following stronger-than-expected results.

"We suspect expectations had moved higher following Intel's results a couple of weeks ago, and the buyside already has a fairly bullish outlook," Bernstein analyst Stacy Rasgon said.

Analysts at TD Cowen described AMD's quarterly results and revenue forecast as "objectively good" but noted that the stock faced a "very high bar" following recent AI-related customer announcements and a sharp rally in its share price.

AMD forecast third-quarter revenue of approximately $13 billion, plus or minus $300 million, exceeding analysts' consensus estimate of $12.52 billion, according to LSEG data.