Performance Analysis of AMD Stocks in the Technology Marketplace

Key Points

• Seaport Research indicates a slowdown in AMD’s artificial intelligence (AI) business.
• New threats of tariffs on semiconductors are emerging.
• A weak employment report shows that the economy is slowing down.

Advanced Micro Devices (NASDAQ: AMD) shares experienced a significant drop today in response to a downgrade by an analyst, who pointed out weaknesses in its artificial intelligence (AI) division.

The stock price was negatively affected by an unencouraging employment report and a new threat of tariffs on semiconductors. Additionally, it was reported that OpenAI plans to manufacture its own AI chips for the first time, which could pose a threat to suppliers like AMD and Nvidia.

As a result, shares fell 6.3% by 11:28 a.m. ET.

Detailed Impact Analysis on AMD

The main reason for today’s mass sell-off was a downgrade from Seaport Research, which lowered AMD’s rating from buy to neutral. This decision was based on supply chain checks indicating a slowdown in growth in its AI chip business.

The August employment report, which showed only 22,000 jobs added last month, seems to have contributed to these concerns, serving as an indicator of slowing economic growth.

Additionally, President Trump reiterated that his administration would impose tariffs on semiconductor imports for companies that do not relocate their production to the United States. While it’s unclear whether this policy would affect AMD, a U.S.-based company that, as a manufacturer without its own factories, contracts production to foundries like TSMC, the uncertainty surrounding this measure could be weighing on the shares.

Impact on the AI and Semiconductor Sector

Competitors like Nvidia, the leading AI chip manufacturer, also experienced declines today. This may be related to a Financial Times report indicating that OpenAI will begin producing its own AI chips for the first time, limiting its dependence on external partners like Nvidia and AMD.

This move by OpenAI could have significant implications for the entire specialized AI semiconductor sector, potentially altering existing market dynamics and competition among the leading providers.

AMD’s Outlook in the AI Market

The Seaport report on the slowdown in AI business growth is the most concerning element, as AMD has positioned itself as the second company in AI GPUs, though still far behind Nvidia.

AMD reported strong sales of its Instinct Mi350 AI accelerators in the second quarter. Currently, the AI boom still seems healthy, as evidenced by the recent doubling of Anthropic’s valuation to $183 billion earlier this week.

However, investors should remain alert to any other reports of weakness in AMD’s AI sector, as this could indicate a broader shift in the trends of the AI semiconductor market.