AMD's (AMD) latest round of quarterly results reminded investors that not all chipmakers will see Nvidia-like growth amid the AI boom.
The chipmaker said it expects revenue for the current quarter to range between $5.4 billion to $6 billion, in line with Wall Street estimates of $5.7 billion.
But shares fell nearly 9% on Wednesday, reflecting that the included reports may not be enough for AI investors after AMD shares rose more than 70% over the past year.
Specifically, Wall Street analysts noted that the outlook for AI growth within AMD may not be as strong as some had hoped.
In a note lowering his price target to $185 from $195, Bank of America research analyst Vivek Arya wrote that AMD bulls may have been disappointed in the company's projections for MI300 chips in 2024, which hit $4 billion. While an increase from the previous guide of $3 billion, Arya noted that she feels it falls short of the more optimistic projections of a range of $5 billion to $6 billion.
This comes in contrast to Nvidia's (NVDA) recent dominance in AI, where the company has consistently surprised Wall Street's lofty expectations.
“We believe NVDA's vertical integration across systems/software will remain difficult for AMD to overcome,” Arya wrote.
Wedbush analyst Matt Bryson saw the price reaction in AMD as investors failing to see the “forest through the trees” in the AI story.
But AMD's move mirrored further declines in chipmaker stocks on Wednesday, suggesting a slowdown in investor enthusiasm around the AI trade, especially in names that have risen significantly over the past year.
Shares of Super Micro Computer (SMCI), which have risen more than 700% over the past year, fell more than 14% on Wednesday after the company reported quarterly revenue of $3.85 billion — below Wall Street estimates of $3.95 billion but… Still reflects that. 200% growth year-over-year The company also boosted its full-year revenue guidance to a range of $14.7 billion to $15.1 billion, up from the previous range of $14.3 billion to $14.7 billion.
However, the broader chip sector fell on news from the two companies, with the Philadelphia Semiconductor Index (^SOX) falling more than 3.5% on Wednesday.
These moves speak to a broader trend. Citi strategist Drew Pettit told Yahoo Finance that he expects this quarter to show up in areas like semiconductors, where stock valuations have risen recently.
“You don't just need to win [on earnings and revenue estimates] And a contract [on guidance]“You need rhythm, leverage and confidence in the long-term trajectory of these companies,” Pettit said.
Josh Schaeffer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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