Advanced Micro Devices shares fell to $504 on Friday, putting AMD 23.58% below its record high and in a bear market. AMD's market capitalization shrank to $824 billion from more than $1.06 trillion in October. Investors have been selling artificial intelligence companies while concerns persist about several issues, including circular investments. Whether upcoming earnings will reverse AMD's decline remains an open question.
AMD is participating in financing for Meta Platforms through a $1 billion investment. Meta is expected to direct some proceeds toward purchases of AMD CPUs, GPUs and networking systems. Meta already ranks among the largest purchasers of AMD products. Nvidia is the company most closely associated with circular investments, but AMD has also made such investments.
AMD has also invested in Anthropic, the world's largest AI lab. AMD committed to investing $5 billion in Anthropic. Anthropic already trains AI models using AMD technology.
AMD's decline also reflects investors selling companies in the GPU industry. Intel recorded the worst daily share-price performance in Intel's history last week after disappointing earnings. Nvidia shares have also fallen by double digits from their record high.
AMD will release quarterly financial results against this backdrop. Recent earnings from leading AI companies, including Micron, SanDisk and Samsung Electronics, suggest AMD is likely to deliver strong results. Benzinga data show analysts forecast September-quarter revenue of $13 billion, representing 41% growth. Analysts expect earnings per share of $1.94, compared with $1.20 in the corresponding quarter last year. AMD's AI business, including GPUs and CPUs, is expected to account for most of that growth.
However, most AI companies have recently suffered share-price declines after earnings, including Intel, Micron and SanDisk. Those declines suggest investors demand strong results and remain concerned about an AI bubble. Options positioning points toward an AMD share-price decline after earnings. AMD's put/call open interest ratio stands at 1.03, indicating that puts outnumber calls. Most puts have a $490 strike price, about 3% below the current share price.
AMD shares have trended gradually lower over recent weeks, declining from an October high of $660 to $504. AMD briefly reached $577 last week before declining again. AMD shares have broken below the 23.6% Fibonacci retracement level. AMD shares also trade below the 50-day moving average. The Supertrend indicator has switched to red. These technical signals suggest AMD shares will likely fall further, potentially reaching the 50% retracement level at $421, a decline of 16.25% from the current price.
AMD Shares Fall 23.58% as AI Sector Faces Circular Investment Concerns
BenzingaShare
Summary
AMD shares dropped 23.58% to $504 on Friday, hitting bear market levels as the AI sector faces fear and greed index swings. Market cap fell to $824 billion from $1.06 trillion in October as investors sold AI-linked stocks. AMD has invested $1 billion in Meta and $5 billion in Anthropic, both using its tech. The company is set to report Q3 earnings amid a sector downturn, with analysts expecting $13 billion in revenue and $1.94 EPS. Altcoins to watch may reflect broader market sentiment as tech stocks face renewed pressure.
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