Why AMD (AMD) Stock Is Down Today

What Happened?

Shares of computer processor maker AMD (NASDAQ:AMD) fell 5.5% in the morning session as semiconductor stocks fell after ASML, the biggest supplier of equipment used in making advanced chips, pre-announced weak earnings. ASML expects fiscal year 2025 sales to come in between 30 billion euros and 35 billion euros, at the lower half of the range it had previously provided. Similarly, bookings for the quarter are reportedly below expectations. Reuters noted that the quarterly earnings numbers were mistakenly published a day earlier than expected. 

Management noted that while the potential in the AI (artificial intelligence) market remained strong, other markets were taking too long to recover, with the observed trend expected to continue into 2025. 

Lastly, ASML's CFO Roger Dassen projected China's contribution to overall revenue to be around 20% (down from the recent estimate of 49%), hinting at potential weakness in the region. 

ASML's technology is used by chipmakers like Nvidia, AMD, Intel, and Samsung to make advanced chips, including those specially designed for AI workloads. Given the company's critical role in the semiconductor manufacturing process, the weak earnings and outlook could signal a possible softening in the industry.

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What The Market Is Telling Us

AMD’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 5 days ago when the stock dropped 5.1% on the news that the company announced new data center AI chips (AMD Instinct MI325X Accelerators), barely a day after executives of rival Nvidia announced to Wall Street analysts that the Blackwell GPU (designed for AI workloads) products are "booked out 12 months." 

Also, AMD's new AI chip won't begin shipping until the first quarter of 2025. AMD's CEO Lisa Su touts her company’s new platform as superior to Nvidia's Blackwell when specific inference benchmarks are used.

AMD is up 13.3% since the beginning of the year, but at $156.93 per share, it is still trading 25.8% below its 52-week high of $211.38 from March 2024. Investors who bought $1,000 worth of AMD’s shares 5 years ago would now be looking at an investment worth $5,108.

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