An analyst downgrade pushed the chip stock lower today.
Shares of Advanced Micro Devices (AMD -5.53%) were taking a dive today in response to an analyst downgrade, calling out weakness in its artificial intelligence (AI) division.
In addition, the stock may have reacted negatively to a downbeat employment report, as well as a new threat about tariffs on semiconductors. Finally, reports came out showing that OpenAI was planning to make its own AI chips for the first time, which could threaten suppliers like AMD and Nvidia.
As a result, the stock was down 6.3% as of 11:28 a.m. ET.
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AMD gets dinged
The main reason for the sell-off today was a downgrade from Seaport Research, which lowered its rating on AMD from buy to neutral, noting that supply chain checks indicated slowing growth in its AI chip business.
Other reports seemed to add to those worries, as the August employment report showed that just 22,000 jobs were added last month, a sign of slowing economic growth.
Additionally, President Trump said again that his administration would impose tariffs on semiconductor imports for companies not moving production to the U.S. It’s unclear if that policy would affect AMD, which is based in the U.S., but as a fabless chip company, contracts with foundries like TSMC for production. The uncertainty around the move may be weighing on the stock as well.
Peers such as Nvidia, the leading AI chipmaker, also fell today, though that may be in response to a Financial Times report that OpenAI will begin production of its own AI chips for the first time, limiting reliance on outside partners like Nvidia and AMD.
What it means for AMD
Seaport’s report of slowing growth in the AI business is the most concerning news item, as AMD has positioned itself as the No. 2 company in AI GPUs, though it’s well behind Nvidia.
AMD reported strong sales of its Instinct Mi350 AI accelerators in the second quarter. At this point, the boom still seems healthy after Anthropic’s valuation doubled to $183 billion earlier this week, but investors should keep their eyes out for any other reports of AI weakness at AMD.
Jeremy Bowman has positions in Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.