AMD Stock Breaks Resistance Heading to ATH, as TMSC Earnings Surprise Markets
A blockbuster earnings report from Taiwan Semiconductor has revived optimism across the chip sector, sparking a sharp rebound in AMD shares
Quick overview
- Taiwan Semiconductor's strong earnings report has boosted confidence in the semiconductor sector, leading to a significant rebound in AMD shares.
- Despite a 17% increase in AMD's stock, concerns remain about its competitive position in the AI market following a disappointing CES presentation.
- AMD's recent earnings were solid, but the market's muted reaction reflects a demand for clear leadership and sustainable margins in the AI space.
- Ongoing U.S.-China export controls and intensified competition from Nvidia and others complicate AMD's outlook and growth prospects.
A blockbuster earnings report from Taiwan Semiconductor has revived optimism across the chip sector, sparking a sharp rebound in AMD shares.
TSMC Delivers the Catalyst Chip Bulls Were Waiting For
Taiwan Semiconductor Manufacturing Company (TSMC) provided a much-needed confidence boost to the semiconductor sector, delivering results that exceeded even elevated expectations. The world’s largest contract chipmaker reported a 35% year-over-year jump in fourth-quarter profit, with net income reaching NT$505.74 billion ($16 billion)—comfortably ahead of forecasts and marking its eighth consecutive quarter of profit growth.
Revenue surged to a record NT$1.046 trillion ($33 billion), surpassing the LSEG SmartEstimate of NT$1.034 trillion and breaking the NT$1 trillion threshold for the first time in the company’s history. Despite heavy capital spending to support advanced-node expansion, gross margins remained firmly within the 59–61% guidance range, reinforcing confidence in TSMC’s pricing power and operational discipline.
Just as important was the forward outlook. TSMC guided first-quarter 2026 revenue to $34.6–$35.8 billion, implying up to 40% year-over-year growth. That guidance confirmed that demand for advanced chips—particularly those tied to artificial intelligence and high-performance computing—remains robust. Unsurprisingly, TSMC shares surged, briefly pushing above the $350 level and lifting the broader chip complex with them.
AMD Finds Relief, but Not Vindication
AMD shares rebounded strongly this week, gaining roughly 17% on the week and rising around 6% on the day, largely in sympathy with TSMC’s results. The stock reclaimed its 50-day moving average, reversing last week’s sharp selloff and climbing back toward the $236 area.
AMD Chart Daily – Buyers Unable to Overcome the 50 SMA
From a technical perspective, the bounce was notable. The 100-day moving average near $200 held as firm support, and the speed of the rebound suggests aggressive dip-buying. However, the recovery should not be mistaken for a full reset in sentiment. Much of the move reflects broader sector relief rather than renewed conviction in AMD’s long-term AI thesis.
CES Shifts the AI Conversation in an Uncomfortable Direction
CES was expected to reinforce AMD’s positioning as a credible alternative in the AI hardware race. Instead, the event intensified doubts about whether the company can meaningfully close the gap with Nvidia.
Going into CES, AMD was still priced as a major beneficiary of sustained AI infrastructure spending. That assumption began to unravel after management’s presentations failed to deliver a sense of urgency or scale. Shares fell more than 3% following CES, extending a broader decline that saw the stock drop nearly 15% last week after being rejected at the 50-day moving average.
Rather than highlighting acceleration, CES underscored the growing disparity between AMD’s roadmap and the market’s expectations for near-term dominance in AI compute.
Nvidia Sets the Pace—and the Bar
CES once again functioned as a showcase for Nvidia’s overwhelming momentum. CEO Jensen Huang detailed the upcoming “Vera Rubin” platform, confirmed full production readiness, and unveiled a flagship server configuration featuring 72 GPUs and 36 CPUs. The message was unmistakable: Nvidia is not talking about future potential—it is shipping at scale today.
By comparison, AMD’s announcements felt incremental. The MI455 processors and MI440X accelerators were positioned as competitive options for server racks and on-premise deployments, but they lacked the ecosystem depth and immediate deployment scale that hyperscalers now demand.
Even AMD’s preview of the MI500 line, slated for 2027 with claims of up to 1,000x performance improvements, landed awkwardly. In a market increasingly focused on near-term capacity, software integration, and proven workloads, promises several years out carry diminishing weight.
Solid Earnings, Muted Market Reaction
Fundamentally, AMD’s most recent earnings report was strong by conventional standards:
- Revenue rose 36% year over year to $9.25 billion
- Non-GAAP EPS reached $1.20
- Forward revenue guidance approached $9.6 billion
Data-center demand remained healthy, and the PC segment showed signs of cyclical recovery. In a different market environment, those numbers would likely have driven a sustained rally.
Instead, the stock struggled to hold gains. The muted response highlights a shift in how investors are evaluating AMD. Growth alone is no longer sufficient—markets are now demanding clear leadership, durable margins, and defensible AI ecosystems. Against that yardstick, AMD is increasingly viewed as a follower rather than a frontrunner.
Valuation Pressure Leaves Little Room for Missteps
AMD’s earlier rally pushed the stock to valuation levels that assumed continued AI momentum and rapid market share gains. As enthusiasm cooled across the AI trade, that premium became vulnerable.
Once technical support levels gave way, selling accelerated. What initially looked like a healthy consolidation evolved into a sharper correction, with momentum-driven investors quick to exit. In an environment where markets are questioning the longevity and intensity of AI spending cycles, richly valued companies without clear dominance are being repriced first.
Export Controls Complicate the Outlook
Adding another layer of uncertainty are ongoing U.S.–China export restrictions. AMD has confirmed it can ship certain MI308 chips to China under a licensing framework, but the arrangement includes a 15% payment to the U.S. government, materially compressing margins.
While this preserves limited access to the Chinese market, it offers little upside and exposes AMD to future policy tightening. Legal questions surrounding the structure have been raised, but AMD appears unwilling to challenge the framework, prioritizing continuity over confrontation.
The OpenAI Deal Loses Its Shine
Earlier optimism surrounding AMD’s partnership with OpenAI has faded. While the relationship initially raised hopes of significant accelerator adoption and strategic relevance, analysts now cite uncertain volumes, vague revenue timelines, and customer concentration risks.
At the same time, hyperscalers are increasingly developing custom silicon, while Nvidia continues to entrench itself through software, networking, and developer tools. In that context, the OpenAI deal no longer looks transformational—it looks incremental.
A Tough Competitive Landscape Ahead
AMD’s challenges are magnified by intensifying competition. Nvidia remains dominant across the full AI stack, while Intel is slowly rebuilding credibility through partnerships and renewed investment. Meanwhile, companies like Broadcom are advancing custom AI solutions tailored to hyperscalers, further fragmenting the market.
For AMD, the path forward remains viable—but far narrower than investors once believed. TSMC’s earnings may have sparked a relief rally, but they also served as a reminder: in AI, execution and scale matter more than ambition alone.
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