AMD falls as dour forecast shows tough competition in AI trade

Lisa Su holds an AMD AI processor in Taipei on June 3.

Advanced Micro Devices shares sank 13 per cent on Wednesday after the company’s lackluster sales forecast deepened investor doubts about its ability to take on AI chip bellwether Nvidia.

AMD predicted its revenue would fall slightly in the current quarter, even as a resumption of China sales gives an unexpected boost, showing its struggle to penetrate the booming market where Nvidia is aggressively defending its position.

Growing use of custom AI chips by tech giants, and Google’s deal to supply Anthropic with its advanced processors in a deal worth billions of dollars have also piled pressure on AMD.

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A new legal plug-in for Anthropic’s Claude chatbot that can automate some routine tasks triggered a selloff in software stocks that extended into a second day on Tuesday, as investors worried about the future of the software industry.

AMD forecast first‑quarter revenue of about US$9.8 billion, plus or minus $300 million, slightly ahead of analysts’ average estimate of $9.67 billion. But the forecast was still lower than the $10.27 billion the company reported in the fourth quarter.

The disappointing outlook comes despite a boost from China-bound AI chip sales, approved under a U.S. license in early 2025, that generated $390 million. Without those sales, AMD’s data center segment would have missed analysts’ estimates in the fourth quarter.

“In such an intense environment, overall results weren’t all that much beyond ‘inline’ without the China boost,” Bernstein analyst Stacy Rasgon said, adding that near‑term AI numbers “are not really inflecting.”

CEO Lisa Su said demand for AMD’s next‑generation AI servers, including shipments to OpenAI and other customers, is set to accelerate sharply in the second half of the year, adding that a global memory‑chip shortage would not constrain production.

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Investors’ reaction to AMD’s performance was in stark contrast to a more than 11% jump in shares of Super Micro Computer, after the company raised its annual revenue outlook, pointing to continued strength in demand for AI‑optimised servers.

The upbeat outlook from Super Micro, a key partner to chip designers including Nvidia and AMD, highlights continued strength in downstream AI infrastructure spending, even as investors question the pace at which chipmakers can convert demand into near‑term earnings growth.

AMD commands a higher forward price-to-earnings multiple of 33.16, compared to SMCI that trades at a more modest 10.81.

(Reporting by Rashika Singh in Bengaluru; Additional reporting by Danilo Masoni in London; Editing by Amanda Cooper and Saumyadeb Chakrabarty)