Advanced Micro Devices (AMD) faced a slight setback in Tuesday’s trading, with its stock slipping by 4.8%. This decline came despite the lack of specific negative news related to the semiconductor company. Interestingly, AMD’s main competitor, Nvidia, actually saw a 1.1% increase in its share price on the same day.
The drop in AMD’s stock price seems to be a reaction to the positive news surrounding Nvidia’s GPU Technology Conference (GTC) held the previous day. Investors were likely anticipating a surge in AI-related stocks, including AMD, following the announcements at the conference. However, when this surge did not materialize for AMD, some investors chose to sell off their shares.
Despite this recent dip, AMD has been experiencing significant growth over the past year, with its share price up by 23% since the beginning of 2024 and by approximately 85% over the last year. Investors have been optimistic about the potential demand for AI-related technologies, which could benefit AMD in the long run.
While Nvidia has seen substantial growth in sales and earnings, driven by AI applications, AMD has not experienced the same level of growth in this space yet. In comparison, Nvidia reported a 265% increase in sales year over year in the last quarter of 2023, with projections for a 234% growth in the first quarter of 2024. On the other hand, AMD saw a modest 10% sales growth in the same period, with flat sales expected for the first quarter of 2024.
For long-term investors, investing in AMD still holds promise, especially with the potential for AI-driven growth in the future. However, compared to Nvidia, AMD’s outlook in the AI sector appears to be more speculative at this point in time.
In conclusion, while AMD’s recent stock price decline may present an opportunity for some investors, it is essential to weigh the risks associated with the company’s position in the AI market. With both positive and cautionary indicators in play, it’s crucial for investors to stay informed and make educated decisions regarding AMD and other AI-related stocks.
