AMD needs a big quarter to escape Intel’s fate as AI fears grow

AMD reports third-quarter results on Tuesday after its shares fell about 17% in two days alongside Intel. Analysts expect revenue to rise 41%, but investors say AMD needs a big beat and a strong outlook as AI spending fears grow.

AMD needs a strong quarter and a bold forecast when it reports results after the US market closes on Tuesday, investors told Bloomberg.

“A modest report just won’t cut it,” said Neville Javeri, a portfolio manager at Allspring Global Investments, which owns the stock.

The pressure comes from Intel. Its shares had their worst day since at least 1982 on Friday after a weak outlook. AMD fell 10% the same day and another 7.5% on Monday, though it is still up more than 120% this year.

Analysts expect AMD’s third-quarter earnings to jump 92% on a 41% rise in revenue. AMD had guided for about $13B in sales, after a record second quarter.

Part of the hope rests on processors. AI agents lean heavily on CPUs, as AMD’s chief technology officer argued in July, and the success of Meta’s Muse agents has led some analysts to raise their targets. Meta is AMD’s second-largest customer, and AMD’s Helios AI racks are now being tested there.

The risk is the mood around AI. Big spenders such as Alphabet and Meta have been punished for spending that eats into their cash, raising fears of a pullback that would hit chipmakers. In July, TSMC’s shares fell despite record revenue.

“I’m just not super comfortable with the valuation,” said Jim Worden of the Wealth Consulting Group, who has sold his AMD shares.