Shares of chipmaker Advanced Micro Devices (AMD) and server maker Super Micro Computer fell in pre-market trading on Wednesday after reporting weak results from their data center segments. This undermined investor confidence in the companies’ AI growth expectations. AMD shares dropped 5%, while Super Micro shares fell approximately 17%.
This sell-off reflects the challenges facing chipmakers, with threats such as weak demand, increasing inventories, and new US tariffs increasing uncertainty in the sector.
Analysts say Super Micro’s poor results stem from market share losses against its major competitors.AMD’s data center unit saw a 14% revenue increase in the second quarter, reaching $3.2 billion, driven by Instinct AI chips and server processors, but fell short of market expectations. “AI expectations didn’t show the kind of increase some investors were hoping for,” say Jefferies analysts.
In contrast, Nvidia’s data center segment saw a 73% increase in the first quarter to $39.11 billion. AMD CEO Lisa Su stated that the company’s AI chip revenue fell year-over-year due to export restrictions on MI308 chips to China. However, she did not provide a clear timeline for lifting the restrictions. Super Micro missed its fourth-quarter estimates, and some operational errors and Nvidia chip delays negatively impacted its performance as it competed with major rivals in the AI server hardware market. Super Micro CEO Charles Liang said, “We expect chip supply to be better this year compared to the last two quarters, which will support our growth.” J.P. Morgan analysts emphasized that AI is still the primary driver of sales growth, noting that Super Micro’s rapid integration of next-generation technologies could support margin improvement.AMD has a higher valuation with a forward price-to-earnings ratio of 32.39, while Super Micro is trading at a more modest ratio of 19.69.
