"AI fever" should rest! AMD pessimism guides Fitch downgrade as chip stocks collapse en masse

According to the Zhītōng Finance APP, chip stocks fell after AMD (AMD.US) released disappointing revenue forecasts on Wednesday. The market is concerned that the weakness in the personal computer market and the slowdown in corporate investment may have a negative impact on chip stocks.

AMD's stock price fell by 7%. Marvell Technology (MRVL.US) dropped nearly 6%, NVIDIA (NVDA.US) slid by almost 5%, Intel (INTC.US) and Texas Instruments (TXN.US) both fell more than 3%, exceeding the decline of the entire technology market.

AMD stated on Tuesday evening that it expects Q3 sales to be $5.7 billion, while analysts expected revenue of $5.81 billion. Meanwhile, the company stated that "weak demand in the personal computer market" led to a 54% decline in its client revenue in the second quarter. AMD attributed the 11% decline in data center business sales to weak enterprise demand.

Semiconductor companies led the decline in technology stocks due to the impact of Fitch Ratings downgrading the long-term foreign currency issuer default rating of the United States from AAA to AA+. Fitch attributed this downgrade to "expectations of deteriorating finances over the next three years," erosion of corporate governance, and increasing corporate debt.

The Nasdaq fell by 2.1% on Wednesday, making it the second-worst performing day of the year.

After AMD released its earnings report, CEO Lisa Su stated in a media interview that the company is going through a "volatile cycle," but she believes that AMD is expected to achieve growth in the second half of the year. Analysts at Jefferies Securities reiterated their "buy" rating on the stock and noted that the recovery of the personal computer market is being realized.

AMD is one of the few companies that produce high-end graphics processing units (GPUs) required for artificial intelligence. Analysts are paying attention to whether its server chips can capture market share from its top competitor, Intel.

The CEO pointed out that the company's philosophy is that personal computers should be productive tools that help individuals organize all aspects of their lives, and generative artificial intelligence will be an important component of this. AMD is closely collaborating with partners such as Microsoft (MSFT.US) to leverage artificial intelligence to enhance computer productivity.

In this quarter, AMD announced the launch of a new chip for building and running artificial intelligence models similar to ChatGPT chatbots. AMD stated that the MI300X chip is currently being provided as samples to customers and will gradually increase production in the fourth quarter. The CEO believes that this is an exciting moment for personal computers.