AI chip darling AMD is struggling to impress Wall Street this fiscal year

AMD's (AMD) latest quarterly results reminded investors that not all chipmakers will see the growth that Nvidia has amid the artificial intelligence boom.

The company reported that it expects sales for the current quarter to be in the range of $5.4 billion to $6 billion, which is in line with Wall Street's expectations of $5.7 billion.

But the stock fell nearly 9% on Wednesday, reflecting that inline reporting may not be enough for AI investors after AMD shares have risen more than 70% over the past year.

Specifically, Wall Street analysts noted that the outlook for AI growth within AMD may not be as robust as some had hoped.

Bank of America research analyst Vivek Arya, in a note lowering his price target from $195 to $185, said AMD bulls have an expected price of $4 billion for the MI300 chips in 2024. I wrote that I may have been disappointed. Alia noted that while this was an increase from the previous guideline of $3 billion, he felt there was a shortfall in the more optimistic outlook of the $5 billion to $6 billion range.

This is in contrast to Nvidia's (NVDA) recent AI dominance, where the company has consistently surprised Wall Street's lofty expectations.

“We believe NVDA's vertical integration across systems/software will continue to be difficult for AMD to win,” Arya wrote.

Wedbush analyst Matt Bryson reasoned that AMD's price reaction was due to investors failing to see the “forest for the trees” in the AI story.

But AMD's move mirrors other declines in chipmaker stocks on Wednesday, indicating a slowing in investor enthusiasm for the AI industry, especially for stocks that have gained significantly over the past year.

Super Micro Computer (SMCI) stock, which has risen more than 700% over the past year, fell more than 14% on Wednesday after the company reported quarterly sales of $3.85 billion. . This fell short of Wall Street's expectations of $3.95 billion, but still reflects the recession. 200% growth compared to the same period last year. The company also raised its full-year sales forecast to a range of $14.7 billion to $15.1 billion, from the previous range of $14.3 billion to $14.7 billion.

Still, the entire chip sector fell on the news from both companies, with the Philadelphia Semiconductor Index (^SOX) down more than 3.5% on Wednesday.

Citi strategist Drew Pettit told Yahoo Finance that the move speaks to broader trends, which he expects to emerge this quarter in areas such as semiconductors, where stocks have soared recently. Ta.

“We don’t just need beats.” [on earnings and revenue estimates] and hold [on guidance]we need beats and raises and confidence in the very long-term trajectory of these companies,” Pettit said.