Shares of computer processor maker AMD (NASDAQ:AMD) fell 5.3% in the afternoon session after the company was downgraded by Seaport Research due to concerns about slowing growth in its artificial intelligence (AI) business. The investment firm lowered its rating on the chipmaker to Neutral from Buy, with no price target, based on recent supply chain checks. These checks suggested slowing growth and difficulty in expanding orders for its AI accelerator business.
Adding to the negative sentiment, New Street also adjusted its price target on AMD, cutting it to $150 from $230. Broader market pressures also weighed on the stock, as the U.S. administration announced it would impose tariffs on semiconductor imports from companies not shifting production to the U.S., creating further uncertainty for the industry.
Separately, rival Broadcom confirmed a significant partnership with OpenAI (speculated), fueling concerns about intensifying competition in the artificial intelligence hardware market. Broadcom announced a $10 billion custom chip deal with OpenAI, a move that highlights a broader trend of major tech companies developing their own processors to cut costs and fine-tune AI performance. This strategy is also being pursued by Alphabet, Amazon, and Meta Platforms.
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AMD’s shares are very volatile and have had 22 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 7 days ago when the stock dropped 3.1% on the news that stocks in the semiconductor sector pulled back triggered by a weak forecast from peer chipmaker Marvell Technology.
Marvell’s disappointing outlook, which it attributed to a slowdown in its custom AI chip business, soured investor sentiment across the industry. The news put pressure on the entire semiconductor sector, with AMD and other major chipmakers like Nvidia also seeing notable drops. The downturn was also influenced by some investors apparently locking in recent gains from the popular “AI trade,” which has driven much of the market’s recent performance. This profit-taking, combined with Marvell’s cautious guidance, contributed to the negative pressure on chip stocks during the session.
