Why AMD Stock Fell 15% in November

There was no shortage of news out on Advanced Micro Devices (NASDAQ: AMD) last month as investors reacted to a solid earnings report, a bullish analyst day conference, a strong earnings report from Nvidia, news that Meta was reportedly planning to buy AI chips from Google, and increasing concerns about a bubble in AI stocks.

By the end of the month, AMD had finished down 15%, according to S&P Global Market Intelligence, although it was volatile for much of the way, and there was good news despite the decline. The chart below shows how the stock swung back in forth over the course of the month.

AMD data by YCharts

The AI sector is evolving

AMD got a boost after reporting third-quarter earnings on Nov. 4, topping analyst estimates with growth on the top and bottom lines. Revenue jumped 36% to $9.25 billion, ahead of the consensus at $8.75 billion. Data center revenue was up 22% to $4.3 billion, while client and gaming revenue jumped 73% to $4 billion. Margins were steady on an adjusted basis, with earnings per share rising from $0.92 to $1.20, edging out estimates at $1.17.

AMD climbed 2% on the news, but then pulled back the following day on a broad sell-off in the Nasdaq following a report showing that job cuts spiked in October.

The following week, the stock popped on its analyst day conference as the company gave a bold forecast, calling for EPS above $20 within the next 3-5 years, and for annual revenue growth of more than 35% during that time.

The stock jumped 9% on that news, but then pulled back again as the Nasdaq sell-off picked up steam, and it slipped in response to Nvidia's earnings report as the AI chip leader reported accelerating growth in its third quarter.

Finally, the stock fell again on Nov. 25 in response to a report in The Information showing that Meta was planning to buy Google's TPUs, a sign of a new competitor in AI.

Image source: Getty Images.

What's next for AMD

Despite the pullback in November, AMD is still having a banner year as the company's AI strategy is resonating with investors and delivering results. While 22% data center revenue growth in the third quarter may be disappointing, investors should take heart in its long-term guidance from analyst day.

For AI investors, AMD still looks like a clear long-term buy-and-hold stock.

Jeremy Bowman has positions in Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.