(Reuters) — Shares of Advanced Micro Devices and Super Micro Computer fell on Wednesday, triggering a selloff in chip stocks, after their earnings disappointed investors who rushed into the sector on hopes that the Increased investment in AI would boost demand.
AMD was down more than 6% in premarket trading and is on track to lose more than $16 billion in market value.
Its forecast of $4 billion in AI chip sales for 2024 fell short of Wall Street’s lofty expectations, having grown accustomed to Nvidia’s massive forecasts over the past year.
Super Micro Computer, whose stock rise of nearly 200% this year has even outpaced Nvidia’s gains, fell more than 11% as its third-quarter revenue missed estimates due to questions over the profitability of a new range of servers.
Executives from AMD and Super Micro Computer said supply constraints were hampering their efforts to capitalize on demand for equipment fueling the generative AI boom.
“Taking a step back, AMD has several customers who are all trying to develop the MI300 (AI chip) very quickly. This is putting a strain on the supply chain to some extent,” analysts at TD Cowen said.
“However, from a demand perspective, customer engagement is actually increasing, not only for the MI300X but for its successor products.”
Other AI-related chip companies also saw declines, with Marvell Technology, Micron Technology and Nvidia falling between 1.5% and 2.5%.
The stocks have significantly outperformed the benchmark S&P 500 index this year and led the Philadelphia Semiconductor index to rise 11%.
Several analysts remain positive on AMD, saying easing supply chain constraints should allow the company to increase its share of the AI chip market and potentially reap billions of dollars in income.
“Against a very large TAM (total addressable market) of AI computing, we believe AMD is on track to solidify its position as the de facto alternative to Nvidia’s leadership position,” analysts at Nvidia said. TD Cowen.
At least 10 analysts lowered their price target on AMD, while eight increased their views, according to LSEG data. Super Micro has seen three increases and two decreases in its price target.
(Reporting by Harshita Mary Varghese; Editing by Krishna Chandra Eluri)
