Wednesday’s 13% drop in AMD shares is not just a reaction to the numbers, but more importantly a signal of growing scepticism about the pace at which the leadership-chasing players can realistically monetise the AI revolution. Although AMD forecast first-quarter revenue of around $9.8 billion – formally beating analysts’ consensus – investors saw cracks in the report that not even an unexpected cash injection from China could bridge.
The foundation of the concern is that without the $390 million from licensed chip sales to the Chinese market, AMD’s key data centre segment would have failed to meet market expectations. For analysts, this is evidence that the organic growth momentum in AI may not be as resilient to shocks as management paints it. While Nvidia aggressively defends its territories, AMD has to contend with a new front: the growing dominance of custom chips designed in-house by technology giants.
AMD’s situation is complicated by the macroeconomic context and strategic partnerships of its competitors. Google’s deal with Anthropic to supply billions of dollars worth of processors is a clear signal that the market is looking for alternatives, but not necessarily where AMD would like to see them. What’s more, AMD’s market valuation – hovering around 33 times future earnings – today seems like a burden compared to the much lower multiples of infrastructure partners such as Super Micro Computer. The latter, by raising its annual forecasts, has become the beneficiary of the optimism that the Santa Clara chipmaker has lacked.
CEO Lisa Su remains calm, announcing a sharp acceleration of shipments to OpenAI and other key players in the second half of the year. The ‘patient offensive’ strategy is based on the assumption that global memory shortages will not hit production, and that demand for next-generation servers will eventually translate into hard profits. But there is a clear lesson for business: in the age of AI, the mere promise of technology is not enough. What matters is the ability to execute rapidly and to withstand attempts by major customers to diversify their supply.
