AI Chip Stocks Stumble: AMD Plunges 6% on Weak Outlook as Nvidia Selloff Deepens

Summary

Artificial intelligence chip stocks took a sharp turn lower on Wednesday after Advanced Micro Devices posted disappointing revenue guidance, sending its shares down over 6%, while losses deepened for Nvidia amid broader investor profit-taking and valuation concerns. The move underscores short-term volatility in the AI infrastructure market, even as long-term demand from hyperscale data centers and cloud providers remains strong.

FRANKFURT / SANTA CLARA — AI semiconductor stocks faced notable selling pressure on Wednesday, with AMD shares sliding more than 6% in early Frankfurt trading after forecasting a slight quarterly revenue decline that missed analysts’ expectations, according to Reuters.

Despite solid long-term prospects for its MI300 and MI325 AI accelerator lines, the company’s guidance raised fresh doubts among investors about its ability to challenge Nvidia’s dominance in the AI silicon market.

The stock had already closed 1.7% lower in Tuesday’s U.S. session, though it still sits roughly 13% higher year-to-date.

Nvidia Feels the Heat

The broad shift in sentiment spilled over to Nvidia, with its shares sliding as traders took profits following a historic rally in 2025.

At an industry event this week, Jensen Huang, Nvidia’s CEO, sought to reassure markets by dismissing fears that AI growth was slowing or that AI would merely cannibalize existing software tools.

Huang argued that AI would expand the “total addressable market” for computing, not shrink it — but his comments did little to arrest the stock’s pullback.

Market Reality Check

Analysts say the dual-company selloff represents a healthy repricing of perfection rather than evidence of deteriorating fundamentals.

One semiconductor strategist told Reuters that AMD’s guidance showed “catching Nvidia is harder than expected,” while Nvidia’s valuation leaves little room for disappointment.

Meanwhile, major cloud providers — including Microsoft and Google — have reiterated massive AI infrastructure spending plans for 2026, suggesting that long-term chip demand remains intact despite near-term volatility.

Why This Matters

• Volatility in AI valuation: The selloff reflects a market recalibration after extraordinary gains in AI chip stocks, rather than a collapse in demand.
• Competitive landscape scrutiny: AMD’s weaker outlook raises questions about challengers’ ability to erode Nvidia’s leadership in AI silicon.
• Profit-taking dynamics: High valuations make AI leaders vulnerable to corrective pressure when growth forecasts moderate.
• Long-term AI demand remains strong: Cloud giants continue capex plans, signalling enduring investment in AI infrastructure.
• Sector risk for tech investors: AI hardware names may see broader swings as earnings forecasts and capital expenditure plans evolve.

Frequently Asked Questions (FAQs)

Q1. Why did AMD stock drop?

AMD’s revenue guidance for the upcoming quarter came in below analyst expectations, disappointing investors who had priced in aggressive growth.

Q2. Is Nvidia in trouble?

Not fundamentally. Nvidia remains the dominant player in AI training and inference silicon. The selloff appears driven more by valuation pressure and profit-taking than structural weakness.

Q3. What did Jensen Huang say?

Nvidia’s CEO argued that AI will expand computing markets rather than replace traditional software tools, attempting to reassure investors about long-term growth.

Q4. Are companies still buying AI chips?

Yes. Major tech firms like Microsoft and Google continue to signal significant capital expenditure on AI infrastructure in 2026.

Q5. What is the “AI Chip War”?

It refers to the competition between Nvidia and challengers like AMD — and potentially others — to supply chips for AI model training and inference.