Why AMD Stock Crashed Today
Key Points
Demand for AMD's chips is rising.
But apparently not fast enough.
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Shares of Advanced Micro Devices (NASDAQ: AMD) sank on Wednesday after the semiconductor designer's growth forecast didn't measure up to investors' sky-high expectations.
By the close of trading, AMD's stock price was down more than 17%.
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AMD's chips are selling well
AMD's fourth-quarter revenue climbed 34% year over year to $10.3 billion.
The chipmaker's data center sales jumped 39% to $5.4 billion, fueled by rising demand for its EPYC processors and Instinct graphics processing units (GPUs).
"Hyperscalers are expanding their infrastructure to meet growing demand for cloud services and AI, while enterprises are modernizing their data centers to ensure they have the right compute to enable new AI workflows," CEO Lisa Su said during a conference call with analysts.
AMD also saw solid growth in its client and gaming segment, with revenue rising 37% to $3.9 billion. The company's highly regarded Ryzen processors helped AMD take share from rival Intel in the personal computer (PC) market. AMD's Radeon GPUs were also well received by gaming customers.
All told, AMD's adjusted net income increased 42% to $2.5 billion, or $1.53 per share. That was above Wall Street's estimates, which had called for adjusted per-share profits of $1.32.
Taking their gains and running
Looking ahead to the first quarter, AMD guided for revenue of $9.5 billion to $10.1 billion. The midpoint of that range would be year-over-year growth of over 30%.
Investors, apparently, wanted more. Some analysts reportedly wanted AMD to offer an even more aggressive growth forecast, driven by booming AI-related demand.
Ultimately, AMD might be a victim of its own success. Prior to today's losses, its stock price had roughly doubled over the past year. With concerns about a possible AI stock bubble mounting, many investors were likely looking for a reason to sell.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Intel. The Motley Fool has a disclosure policy.
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