AMD shares closed 7% lower on Wednesday even after the company posted strong second-quarter earnings, as investors reacted to Elon Musk's praise for rival Nvidia's chip architecture. CEO Lisa Su said she still respects Musk while pointing to AMD's own data center growth. Nvidia shares gained 3.4% the same day.
AMD shares closed 7% lower on Wednesday, even after the chipmaker posted second-quarter revenue of $11.54 billion, up 50% and ahead of analyst expectations of $11.28 billion. The sell-off came as Nvidia shares climbed 3.4% the same day, after Elon Musk said on SpaceX's earnings call Tuesday that AMD's AI chip rival had the best architecture, while touting close cooperation between the two companies.
Su brushes off Musk's Nvidia praise
Su responded to Musk's comments on CNBC's "Squawk on the Street", saying "I have tremendous respect for Elon and everything that he has done." She called SpaceX an important technology company and said AMD continues to do business with many tech companies, including those in the space market. In May 2025, Musk had told CNBC he expected to keep buying chips from both AMD and Nvidia, and possibly others.
Data center sales drive the growth
But the earnings themselves pointed to strength. Data center sales rose 107% year over year to $6.7 billion, which AMD attributed to central processing unit and graphics processing unit sales, and drove much of the quarter's overall growth. Su told analysts the company expects server revenue to grow 80% year over year in the second half of 2026 and more than 70% in 2027.
Su told CNBC that customers are giving AMD greater visibility to plan around server supply, and that the company is investing across its supply chain and with partners to meet the higher demand customers are asking for. AMD also guided for Data Center segment growth of well over 100%.
Earnings beat consensus, but not the boldest forecasts
Even so, the reaction reflected investors who have stayed skittish about some AI stocks this year. Deutsche Bank analysts said in a Wednesday note that the quarter came in slightly ahead of consensus but fell below more optimistic estimates. AMD has still been a major beneficiary of the AI boom, with the stock trading up 132% so far this year.
In July, AMD raised its outlook for the size of the semiconductor industry, saying it could be worth $2 trillion a year by 2028, with $1.4 trillion of that coming from AI accelerators, up from a prior estimate of $500 billion by 2028. Michael Field, chief equity strategist at Morningstar, said the pullback reflects market expectations that had run too high, noting the stock has trebled over the last 12 months and now trades at a price-to-earnings multiple of 170. He added that investors may view the dip as a buying opportunity in the coming weeks.
Source: CNBC
Trading involves risk.
Risk Disclaimer
