What Happened?

Shares of computer processor maker AMD (NASDAQ:AMD) fell 9.6% in the morning session after the company reported weak third-quarter earnings results. Its revenue guidance for next quarter missed analysts' expectations. Revenue beat analysts' expectations by a narrow margin during the quarter, while EBITDA beat more convincingly. The outlook is weighing on shares as expectations were likely high heading into the announcement amid the ongoing AI rave.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy AMD? Access our full analysis report here, it’s free.

What The Market Is Telling Us

AMD’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 20 days ago when the stock dropped 5.1% on the news that the company announced new data center AI chips (AMD Instinct MI325X Accelerators), barely a day after executives of rival Nvidia announced to Wall Street analysts that the Blackwell GPU (designed for AI workloads) products are "booked out 12 months." 

Also, AMD's new AI chip won't begin shipping until the first quarter of 2025. AMD's CEO Lisa Su touts her company’s new platform as superior to Nvidia's Blackwell when specific inference benchmarks are used.

AMD is up 7.8% since the beginning of the year, but at $149.47 per share, it is still trading 29.3% below its 52-week high of $211.38 from March 2024. Investors who bought $1,000 worth of AMD’s shares 5 years ago would now be looking at an investment worth $4,512.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefitting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.