Advanced Micro Devices (AMD) experienced its most significant stock decline in almost nine years after the chipmaker’s sales forecast failed to meet investor expectations. This raises concerns about the company’s progress in the artificial intelligence (AI) market. AMD anticipates first-quarter sales of approximately $US9.8 billion ($14 billion), with a margin of plus or minus $US300 million. While this figure exceeds the average analyst estimate of $US9.39 billion, some projections had surpassed $US10 billion.
AMD reported sales of older chips in China, a factor that boosted revenue but negatively impacted profit margins. The company is navigating trade restrictions while trying to compete with Nvidia in the lucrative AI market. AMD has stated that a new, more powerful chip design, slated for release in the second half of the year, will provide a competitive edge.
On Wednesday, AMD shares plummeted 17 per cent to $US200.19 in New York, marking the largest single-day drop since May 2017. Prior to this decline, the shares had increased by 13 per cent year-to-date through Tuesday’s close. Advanced Micro Devices is a semiconductor company that designs and manufactures computer processors and related technologies. Its products are used in a wide range of devices, including personal computers, servers, and gaming consoles.
In the fourth quarter, sales rose 34 per cent to $US10.3 billion, surpassing the average estimate of $US9.7 billion. Profit reached $US1.53 per share, excluding specific items, exceeding the analyst projection of $US1.32 on average.
