AMD Stock Drops 8% After Disappointing Q2 Revenue Forecast
Advanced Micro Devices (AMD) shares plunged 8% in premarket trading Thursday after the chipmaker issued weaker-than-expected revenue guidance for the second quarter. The drop erased nearly $15 billion in market value as investors reacted to the company's forecast of $5.4 billion to $6 billion in Q2 revenue, below Wall Street's $6.02 billion consensus.
The Santa Clara-based semiconductor firm reported strong Q1 earnings of $5.5 billion in revenue, beating estimates, but concerns about slowing demand in the PC and data center markets drove the selloff. AMD CEO Lisa Su acknowledged "mixed demand signals" during Wednesday's earnings call, particularly in the enterprise server segment.
Analysts at Morgan Stanley and Bernstein downgraded their price targets Thursday morning, citing inventory corrections and competitive pressure from Nvidia in AI chips. The stock decline comes amid broader tech sector volatility, with the Nasdaq Composite falling 1.2% in early trading.
Retail investors flooded social media platforms with reactions, as AMD ranks among the most popular stocks on Reddit's WallStreetBets forum. Some traders pointed to the dip as a buying opportunity, while others expressed concern about AMD's ability to maintain market share against rivals.
The chipmaker's performance is being closely watched as a bellwether for the semiconductor industry, which has seen uneven recovery post-pandemic. AMD shares had gained 32% year-to-date before Thursday's drop, outperforming many peers in the Philadelphia Semiconductor Index.
Market analysts note that AMD's inventory levels rose 7% sequentially to $4.7 billion, raising questions about demand softening. The company maintains its full-year guidance for data center GPU revenue exceeding $3.5 billion, but some investors remain skeptical about near-term growth prospects.
AMD's stock movement is trending nationally as individual investors monitor the volatility. The company employs over 25,000 workers globally, with significant operations in Austin, Texas and Silicon Valley. Thursday's selloff marks the stock's worst single-day performance since October 2023.
