Advanced Micro Devices (AMD) shares declined in early trading, shedding 1.73% to $217.60. This movement followed disappointing quarterly results from software giant Oracle, triggering a broader sell-off in semiconductor stocks tied to artificial intelligence infrastructure.
A Broader Warning for the Semiconductor Sector
While a single-day drop may appear minor, market participants are interpreting Oracle’s performance as a potential cautionary signal for the entire AI chip industry. The concern stems from Oracle’s role as a key indicator for corporate spending on the data center infrastructure that fuels AI development. Oracle reported revenue of $16.06 billion after the market closed yesterday, falling short of the $16.21 billion consensus forecast on Wall Street.
In response, Oracle’s stock plummeted approximately 11%. The weakness spread to chipmakers, with NVIDIA also declining 1.6% to $180.80. The underlying fear is that if a major cloud provider like Oracle is showing signs of strain, other hyperscalers might similarly pare back their substantial investments in AI hardware. This scenario represents a primary risk for AMD investors, whose bullish thesis is heavily dependent on continued expansion in data center budgets.
Should investors sell immediately? Or is it worth buying AMD?
All Eyes Turn to Broadcom for Confirmation
The narrative for chip stocks, however, is poised for a potential reassessment. Broadcom, a direct competitor to AMD in the semiconductor space and a significant player in AI, is scheduled to report its own quarterly results after today’s market close.
A strong report from Broadcom could swiftly alleviate the concerns ignited by Oracle’s numbers, demonstrating resilient demand for AI components. Conversely, another disappointing set of results would likely intensify the ongoing correction within the semiconductor sector. From a technical analysis perspective, the $215 level is now viewed as a critical support zone for AMD shares. Maintaining this price point is considered essential for the stock’s longer-term upward trend to remain intact.
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