What Happened?
Shares of computer processor maker AMD (NASDAQ: AMD) jumped 3.7% in the afternoon session after investor optimism about its position in the artificial intelligence (AI) market continued, building on gains from a recent rally.
The move extended a surge from the previous trading session when the stock jumped on the growing realization that major tech companies would need AMD as a "second source" to meet the high demand for AI chips. This rally also represented a rebound for the stock, which had tumbled after its latest earnings report despite the results beating estimates. That report highlighted strong fundamentals, with the company's data center segment growing 32% over the previous year, driven by strong demand for its EPYC processors and Instinct accelerators. The positive move also occurred amid a broader rally in the technology sector.
After the initial pop the shares cooled down to $216.04, up 4% from previous close.
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What Is The Market Telling Us
AMD’s shares are extremely volatile and have had 33 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 3 days ago when the stock gained 7.7% on the news that the stock rebounded from a steep plunge that was triggered by its recent earnings report.
The initial sell-off, which saw the stock fall by more than 20%, occurred despite the company reporting strong fourth-quarter results. During that quarter, sales grew 34% and earnings per share rose 40% compared to the previous year, beating expectations. However, the company's forecast for the first quarter disappointed investors. AMD projected sales of about $9.8 billion, which signaled a slowdown from its record fourth quarter. This guidance did not meet the high growth expectations investors had, particularly for its business in the artificial intelligence (AI) market, leading to the sharp decline. The subsequent recovery suggested that some investors saw the sell-off as a buying opportunity.
AMD is down 3.3% since the beginning of the year, and at $216.04 per share, it is trading 18.3% below its 52-week high of $264.33 from October 2025. Investors who bought $1,000 worth of AMD’s shares 5 years ago would now be looking at an investment worth $2,376.
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