Strong Earnings, Weak Confidence — AMD Stock Rally Breaks Below Support
After a stellar quarter and major announcements, AMD’s momentum has cooled sharply as investors reassess its lofty valuation and long-term g
Quick overview
- AMD's stock fell over 7% after a strong Q3 earnings report, as investors reassess its valuation and growth prospects.
- The company's strategic partnership with OpenAI initially boosted shares, but concerns about profitability and competition are now weighing on investor sentiment.
- Rising competition from companies like Intel and Nvidia in the AI chip market adds pressure on AMD's growth trajectory.
- The upcoming Financial Analyst Day is crucial for AMD to address investor doubts and restore confidence in its future performance.
After a stellar quarter and major announcements, AMD’s momentum has cooled sharply as investors reassess its lofty valuation and long-term growth outlook.
AMD Stock Retreats After Record High
Advanced Micro Devices (NASDAQ: AMD) shares fell over 7% on Friday, erasing much of the week’s earlier gains despite a strong third-quarter earnings beat and an optimistic Q4 outlook. The pullback follows weeks of intense speculation over AMD’s roadmap, with traders now shifting focus to next week’s Financial Analyst Day, where management must justify high expectations and lofty valuations.
Earnings Beat Fails to Soothe Investor Concerns
- AMD’s Q3 2025 results exceeded forecasts:
- Revenue: $9.25 billion (+36% year-over-year)
- Non-GAAP EPS: $1.20
- Q4 Guidance: $9.6 billion (±$300 million)
Data center sales rose 22% to $4.3 billion, while client revenue surged 46% to a record $2.8 billion. But the relief was short-lived — the stock, which hit $260 midweek, reversed sharply as analysts warned that growth expectations may already be priced in.
OpenAI Deal Boosted Hype, But Now Raises Pressure
Earlier in October, AMD stunned markets by announcing a strategic partnership with OpenAI, granting OpenAI a 10% stake in exchange for access to AMD’s Instinct AI processors. The deal briefly fueled a 46% rally, sending shares from $165 to $267 within four days.
However, enthusiasm is fading as investors demand clarity on profitability and broader client adoption beyond OpenAI — particularly partnerships with Meta and Microsoft that could determine AMD’s AI hardware revenue sustainability.
Selling Pressure Returns as Chart Weakens
Technically, AMD has broken below its 20-day simple moving average, erasing Thursday’s gains. Analysts warn that continued weakness could push the stock toward its early-October gap near $200 if macroeconomic headwinds persist.
AMD Chart Daily – Selling Pressure Returns at These Levels
The market’s rotation away from expensive tech names has further weighed on sentiment, with traders cautious ahead of the Analyst Day presentation.
Rising Competition Intensifies AI Chip Battle
While AMD’s Instinct chips have positioned it well in the AI accelerator market, rivals are catching up fast. Broadcom, Intel, and Nvidia have all announced new partnerships and joint development projects, intensifying competition in the data-center and AI compute sectors.
Intel and Nvidia’s recent $5 billion collaboration to co-develop next-generation AI processors is seen as a potential threat to AMD’s growth trajectory.
Leadership Departure Adds to Market Jitters
Investor unease grew after Philip Carter, AMD’s Chief Accounting Officer, announced his exit to take a CFO position elsewhere. Although the move appeared amicable, its timing — amid an evolving AI strategy and high market expectations — unsettled investors seeking stability during AMD’s expansion phase.
Outlook: Great Results, Growing Doubts
Despite solid fundamentals, AMD faces an uphill battle to sustain its valuation du to continued AI exposure. Analysts remain cautiously optimistic but warn that the next phase of growth must be proven, not promised. The upcoming Analyst Day will be critical for restoring confidence — or confirming that AMD’s recent rally has outpaced reality.
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