China’s breakthrough in domestic chipmaking equipment sparked a major semiconductor sell-off, dragging down Advanced Micro Devices, Inc. (NASDAQ:AMD) despite strong fundamentals.
An announcement from a manufacturing facility in Shanghai on July 27, 2026, caused a severe summer downturn for the AI semiconductor market. State-supported Shanghai Aishengna reported the production of homegrown immersion deep ultraviolet (DUV) lithography systems for domestic fabrication facilities. It marks the first viable domestic substitute for technology ASML (NASDAQ:ASML) has exclusively controlled for twenty years, leading to an 8% decline in ASML’s shares. But the loss did not stop here.
Advanced Micro Devices, Inc. (NASDAQ:AMD) fell over 8%, recording the steepest decline among its peers. The fall comes despite the core business metrics remaining steady. Merely a few months ago, the company reported a strong first-quarter performance, with earnings per share reaching $1.37, beating the consensus estimate of $1.29, and total revenue touching $10.25 billion against the forecasted $9.89 billion. Data-center revenue alone saw 57% year-over-year growth, reaching $5.8 billion. The 8% decline does not reflect a flaw in any of these fundamentals, because there were none.
The Selloff Priced the Wrong Risk
Immersion DUV technology processes mature nodes. On the other hand, AMD’s MI300 series and upcoming MI400/MI455X accelerators rely on TSMC’s cutting-edge extreme ultraviolet (EUV) lithography. The related technology is exclusively supplied by ASML and goes beyond the current Chinese capabilities. Shanghai Aishengna’s DUV equipment cannot produce these advanced accelerators. As such, their technology affects neither TSMC’s supply chain nor AMD’s pricing power. Additionally, Aishengna aims for just five units in 2026 compared to ASML’s 130 in the same year. With EUV remaining inaccessible to domestic producers, investors’ reaction is impulsive rather than based on an evaluation of the underlying technical reality.
The Multiple Is the Real Vulnerability
The numbers remain solid even after the decline. Post-drop, Advanced Micro Devices, Inc. (NASDAQ:AMD) is trading near a forward P/E of 60 – approximately two times the industry median of 30x. Its EV/EBITDA is in the upper 80s, and its PEG is above 1.2 as compared to Nvidia at 0.5. Alongside these figures, AMD retains its position as the more expensive, lower-margin, second-place vendor. When valuation multiples carry the weight of a stock’s worth, a sudden market shock will hit the stocks with the smallest safety margins the hardest. The fault is not with the company, but the elevated purchase price already set by investors.
