$1.5 Billion Update Hits AMD But Wall Street Has it Wrong

On Tuesday, I wrote about Nvidia NVDA, and how it could become a standout stock once again. That article also mentions recent positive price action in the semiconductor sector, which also bodes well for Nvidia.

After Tuesday’s closing bell, another one-time standout stock, Advanced Micro Devices AMD, reported earnings. Advanced Micro Devices competes with Nvidia in the AI and graphics space, and with Intel INTC on personal computer processors.

AMD reported solid earnings and revenue figures, and climbed 5% in after-hours trading. Then came the conference call. AMD raised revenue guidance for the current quarter to $7.4 billion, up from $7.22 billion, citing strong demand. 

'AI Momentum'

Revenues climbed by 36%. Data center sales jumped by 57%. CEO Lisa Su spoke of “strength in our core businesses and expanding data center and AI momentum.”

Then AMD’s after hours gains quickly faded. The company announced that it expects to lose $700 million in revenue in the current quarter — and $1.5 billion for the full year — due to export controls.

While that news was blamed for AMD’s fading fortunes in after hours trading, it’s worth noting that analysts at JPMorgan JPM predicted that AMD would take a $1.5 to $1.8 billion revenue hit due to export limits just three weeks ago. 

News Is Priced In 

Either way, the bad news is now reflected in AMD’s price. This is important because it shows that investors are betting on a negative impact due to export controls for AMD.

That seems short-sighted to me. If we’ve learned anything from the ever-changing dynamics of tariffs and related trade issues, it’s that anything and everything is subject to change. Investors are anticipating a negative outcome, but they don’t know what will actually happen.

For example, if stocks, especially semiconductors, begin an extended slide due to export controls, will that affect the Trump administration’s stance? Will export controls be loosened or delayed in such a scenario, causing those stocks to rebound?

Let's Get Technical

Technically, AMD isn’t a buy just yet, but it could be very soon. The stock needs to break out of a bearish channel that has held it captive since October 2024 (black dotted lines). A close above $105 would place AMD cleanly above its bearish trend line (point A). I'd use that as a buy signal. 

When it comes to AMD, Wall Street could be overestimating the negative impact of export controls, and perhaps underestimating the positives of a company that has underperformed the broader market for over a year. 

AMD shares are down 18% year to date, after falling 18% in a strong market last year.

At the time of publication, Ponsi had no positions in any securities mentioned.