Key Takeaways
- Shares of Advanced Micro Devices declined 3.72% Tuesday following news that OpenAI fell short of internal growth projections
- OpenAI maintains a supply agreement with AMD for data center infrastructure components
- Despite Tuesday’s decline, AMD shares have climbed approximately 49% since the start of the year
- First-quarter financial results scheduled for May 5; analysts project $1.28 earnings per share on $9.87B in revenue
- Current forward price-to-earnings ratio of 50 sparks debate over valuation ahead of quarterly report
The semiconductor giant delivered impressive fourth-quarter results with revenue reaching $10.3 billion, marking a 34% increase compared to the prior year. AMD’s data center division generated $5.4 billion during the same period, representing a 39% year-over-year expansion. The company maintains long-term GPU supply agreements with both OpenAI and Meta Platforms.
Advanced Micro Devices, Inc., AMD
Then came Tuesday’s selloff.
Shares of AMD retreated 3.72% following reports indicating that OpenAI underperformed against its internal revenue forecasts and user acquisition benchmarks. Since OpenAI represents a significant data center customer for AMD, the disclosure created unease among investors already scrutinizing artificial intelligence infrastructure spending trends.
The semiconductor sector experienced broader pressure as well. AMD had rallied approximately 25% during the previous week, momentarily reaching $350 and posting gains of roughly 65% for April. That momentum was partially driven by impressive quarterly performances from Intel and Texas Instruments.
Tuesday’s trading volume registered around 29 million shares, modestly below the 32.47 million three-month average daily volume.
Quarterly Results Approaching
AMD will release first-quarter earnings on May 5 following market close. Analyst consensus calls for adjusted earnings per share of $1.28 alongside revenue of $9.87 billion. Company guidance pointed toward Q1 revenue near $9.8 billion, suggesting approximately 32% growth year-over-year.
AMD has surpassed analyst expectations in each of its last eight quarterly reports, making another positive surprise plausible. Intel’s first-quarter revenue exceeded consensus estimates by over $1 billion, potentially signaling favorable conditions for AMD as well.
Chief Executive Lisa Su indicated the company is engaged in ongoing discussions with customers regarding multi-year deployment commitments connected to its Helios and MI450 product lines launching later in 2026. AMD previously announced a 6-gigawatt Instinct GPU agreement with OpenAI alongside a separate 6-gigawatt arrangement with Meta.
Valuation Questions Persist
Notwithstanding solid operational performance, AMD’s current valuation metrics remain a focal point. The stock carries a trailing price-to-earnings ratio exceeding 123 and a forward P/E around 50. These represent premium multiples, even accounting for the company’s growth trajectory.
Analyst sentiment reflects a Moderate Buy consensus, derived from 19 Buy recommendations and 8 Hold ratings issued over the past three months. The mean price target stands at $295.04, implying roughly an 8% downside from present trading levels.
The chip industry has experienced significant appreciation throughout the past month. Current valuations across the sector embed assumptions of sustained, multi-year artificial intelligence infrastructure expansion — though semiconductor stocks have historically exhibited cyclical behavior.
Any deceleration in cloud hyperscaler capital expenditures, or additional indicators that AI implementation is trailing internal projections at major firms like OpenAI, could rapidly shift investor sentiment.
AMD’s latest closing price was $323.61, maintaining approximately 49% gains year-to-date notwithstanding Tuesday’s pullback.
