What Happened?
Shares of computer processor maker AMD (NASDAQ: AMD) fell 6.7% in the afternoon session after its second-quarter earnings report showed that a large inventory charge related to U.S. export controls on its data center chips overshadowed record revenue. The semiconductor company posted a 32% year-over-year revenue jump to a record $7.7 billion. However, AMD also revealed an $800 million hit due to restrictions on its MI308 chip shipments to China. This charge pressured the company's profitability and caused its adjusted earnings per share of $0.48 to miss analyst expectations. The export curbs also squeezed the company's gross margin, which narrowed significantly from the previous year. Investors reacted negatively to the earnings miss and margin pressure, despite the strong sales figures.
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What Is The Market Telling Us
AMD’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock dropped 3.2% on the news that the U.S. jobs report for July came in significantly weaker than expected while new widespread import tariffs were announced, sparking fears of a potential economic slowdown. The U.S. economy added only 73,000 jobs, far below estimates, and massive downward revisions to the prior two months painted a much weaker picture of the labor market. This has stoked recession fears, which would directly impact demand for chips used in countless products. Compounding these worries, the White House announced new tariffs, including a 20% levy on imports from Taiwan, a global hub for chip manufacturing. This dual shock of slowing domestic growth and renewed trade friction creates a challenging outlook for the highly cyclical and globally connected semiconductor industry, leading to a broad-based sell-off.
AMD is up 35.4% since the beginning of the year, and at $163.29 per share, it is trading close to its 52-week high of $179.51 from July 2025. Investors who bought $1,000 worth of AMD’s shares 5 years ago would now be looking at an investment worth $1,883.
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