Advanced Micro Devices Inc. (NASDAQ: AMD) investors are slamming the exit door. The stock cratered over 8% during Wednesday’s session. A massive disconnect emerged between a record-breaking earnings report and a forecast that suggests the AI chip leader is losing its near-term sprint.
The numbers were theoretically flawless. CEO Lisa Su reported adjusted earnings of $1.53 per share, crushing the $1.32 consensus. Fourth-quarter revenue reached $10.3 billion. This 34% surge normally triggers a rally, yet the market cap evaporated by $30 billion as the closing bell approached.
Skeptics are eyeing the “quality” of those earnings. AMD admitted that $390 million of its revenue came from a one-time windfall in China sales. The government cleared a backlog of export licenses for the MI308 chip. That window is now slamming shut for the current quarter.
Guidance failed the “Nvidia test.” AMD expects roughly $9.8 billion in revenue for the next period. This represents a 5% sequential decline. In an AI market where Nvidia Corp. (NASDAQ: NVDA) delivers vertical growth, any sign of a seasonal slowdown is treated as a failure.
Mitch Steves of RBC Capital remains a buyer with a $230 target. He noted the “mixed outlook” but pointed to long-term data center gains. Still, the stock’s 40x forward earnings multiple leaves zero room for error. Investors are repricing for a less-than-perfect 2026 trajectory.
Gaming also added to the drag. The company signaled that the next Microsoft Corp. (NASDAQ: MSFT) Xbox might not debut until 2027. This hardware gap leaves a revenue void that AI chips must fill. Traders clearly decided the bridge to 2027 is too long to cross today.
