Advanced Micro Devices (AMD-Q) shares fell nearly 7 per cent in premarket trading on Wednesday after the chipmaker’s lackluster quarterly sales forecast rekindled investor doubts over its ability to take on AI chip bellwether Nvidia.
The chipmaker’s retreat comes alongside a broader selloff in global software stocks tied to fears that AI will replace software and related tools, following an updated chatbot release from AI developer Anthropic.
For hardware makers such as Nvidia and AMD, the risk remains that AI tools have shown limited real-world productivity gains and investor patience with Big Tech’s mounting AI spending is waning.
Nvidia fell 0.6 per cent and Broadcom slid 1.24 per cent. The iShares semiconductor ETF dipped 0.5 per cent in premarket trading.
Although AMD’s shares doubled in 2025, outpacing the chip index, analysts cautioned its AI gains hinge on a narrow customer base as Nvidia aggressively courts rivals’ partners, including a reported $20 billion push tied to chip startup Groq.
AMD forecast first-quarter revenue of about $9.8 billion, plus or minus $300 million, slightly ahead of analysts’ estimates at $9.67 billion. But the forecast was still lower than $10.27 billion in the fourth quarter.
The disappointing outlook comes despite a late boost from China-bound AI chip sales approved under a U.S. license that generated $390 million. Without those sales, AMD’s data center segment would have missed estimates in the fourth quarter.
“In such an intense environment, overall results weren’t all that much beyond ‘inline’ without the China boost,” Bernstein analyst Stacy Rasgon said, adding that near-term AI numbers “are not really inflecting.”
CEO Lisa Su said demand for AMD’s next-generation AI servers, including shipments to OpenAI and other customers, is set to accelerate sharply in the second half of the year, adding that a global memory-chip shortage would not constrain production.
Investors’ reaction to AMD’s performance was in stark contrast to a more than 10 per cent jump in shares of Super Micro Computer, after the company raised its annual revenue outlook, pointing to continued strength in demand for AI-optimised servers.
The upbeat outlook from Super Micro, a key partner to chip designers including Nvidia and AMD, highlights continued strength in downstream AI infrastructure spending, even as investors question the pace at which chipmakers can convert demand into near-term earnings growth.
AMD commands a higher forward price-to-earnings multiple of 33.16, compared to SMCI that trades at a more modest 10.81.