Advanced Micro Devices Inc. (NASDAQ:AMD) stock fell nearly 9% in premarket trading Wednesday as investors appeared to want a stronger forward outlook following the chipmaker’s second-quarter results.
The sell-off came even after AMD reported second-quarter revenue of $11.54 billion, topping the Wall Street estimate of $11.28 billion.
However, much of the market’s attention shifted to the company’s outlook, particularly expectations for Helios, its upcoming rack-scale AI platform.
Futurum Group CEO Daniel Newman said the results “were good,” but added that investors were looking for a “blowout guide driven by Helios.”
AI Investment And Higher Expectations
The results also highlighted a sharp increase in investment spending. Capital expenditures rose to $808 million during the quarter from $282 million a year earlier and $389 million in the first quarter.
While the higher spending supports AMD’s long-term AI expansion strategy, it may have weighed on near-term investor sentiment.
Adding to those expectations, AMD’s results followed a strong quarterly report from Intel Corp. (NASDAQ:INTC), raising the bar for investors evaluating the semiconductor sector.
AMD Results Look Solid Despite Stock Pressure
Bernstein senior analyst Stacy Rasgon said AMD delivered a solid quarter but may have fallen short of elevated investor expectations.
Rasgon, who has an Outperform rating and a $600 price forecast on AMD, told CNBC he saw nothing wrong with the results. He said revenue guidance and his earnings-per-share estimate were both above expectations, while gross margin was in line with forecasts.
He said investors may have been looking for more after Intel’s strong report, even though AMD expects data center growth to accelerate in the second half of the year.
Analyst Sees AI Ramp And Strong Demand
Looking ahead, Rasgon said AMD’s AI opportunity should expand further in the fourth quarter as the Helios platform ramps. He said the AI chip market remains large enough for AMD to grow alongside NVIDIA Corp. (NASDAQ:NVDA) and other competitors.
He also said demand for server CPUs remains exceptionally strong, with customers buying as much supply as vendors can deliver. While Intel continues to sell products despite acknowledging competitive challenges, Rasgon said AMD has products that customers are actively seeking.
He said investors will be looking for more detail from AMD on the pace of data center growth, the Helios rollout, potential revenue contributions from Anthropic and the outlook for the company’s client business.
AMD Top ETF Exposure
- iShares Semiconductor ETF (NASDAQ:SOXX): 8.47% weighting
- ARK Next Generation Internet ETF (NYSE:ARKW): 8.31% weighting
- Dan Ives Wedbush AI Revolution ETF (NYSE:IVES): 7.19% weighting
Because AMD is a large holding in these funds, significant ETF inflows or outflows can trigger automatic buying or selling of the stock.
Price Action
AMD Price Action: Advanced Micro Devices shares were down 8.80% at $472.94 during premarket trading on Wednesday, according to Benzinga Pro data.
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