AMD shares tumble in chip selloff despite record quarter

Advanced Micro Devices shares fell by double digits in morning trading on Thursday, November 5. The drop came two days after the company reported a record quarter and gave a forecast above expectations, but a sector-wide selloff in semiconductor stocks overwhelmed the results. According to Bloomberg, investors have turned skeptical of the artificial intelligence trade since Democrats swept the midterm elections. The Philadelphia Stock Exchange Semiconductor Index PHLX Semiconductor Index ↘ 9.71% was on pace for its worst day since June and its fifth straight weekly decline.bloomberg.com

A record quarter, then a rout

AMD said third-quarter revenue rose 45% from a year earlier to a record $13.4 billion. Adjusted earnings per share came in at $2.09, the company's earnings release showed. It also guided fourth-quarter revenue to about $17 billion, plus or minus 3%. CNBC reported that the results beat Wall Street estimates of $1.95 per share on $13.09 billion in revenue. Data center sales nearly doubled. On the earnings call, CEO Lisa Su said AMD now expects total revenue to grow more than 80% in 2027, and that data center will make up more than 80% of sales, according to the call summary.finance.yahoo.com+2

That optimism didn't last. Investing.com noted that AMD had already lost roughly 22% over the past month before the election results came in. Shares gained more than 4% early Wednesday but ended that session up only 1%, Yahoo Finance reported.ca.investing.com+1

Regulation fears hit AI chipmakers

The selling spread across the sector. Nvidia, Micron Technology and AMD led the losses, and the Nasdaq Composite fell sharply, Yahoo Finance reported. Broadcom and Intel also dropped. Investors are weighing what a Democratic sweep could mean for the construction of power-hungry data centers. Reuters reported that the Nasdaq was on course to confirm a correction, coming a day after the election results set off a broad rally.finance.yahoo.com+1

Bloomberg said a Democratic-controlled Congress could bring tighter rules for US data centers and weaken chip demand. Disappointing market reactions to earnings from Arm Holdings and Qualcomm added to the pressure, Bloomberg Law reported. Investing.com wrote that a prominent Democratic congresswoman had called for a pause on advanced AI development, which rattled chipmakers whose outlooks depend on data center buildouts.news.bloomberglaw.com

Fundamentals versus policy risk

The selloff came after a strong run for AMD. The stock was up about 125% this year before the earnings report, according to CNBC. Rolling Out noted that no AMD-specific bad news had been reported. It also pointed out that a lawmaker's call for an AI pause is not legislation, and no bill has been cited.rollingout.com

Bulls say the decline is an overreaction given AMD's results. Bears point to stretched valuations and question how long AI spending can last. In Investing.com's words, the market is now debating "whether AI infrastructure spending can survive a more regulatory-minded Congress."