AMD Shares Plunge 9% After Underwhelming Earnings Forecast
By John Nada·Feb 4, 2026·2 min read
AMD's stock plunged 9% after its forecast fell short of expectations, despite strong fourth-quarter earnings. The company faces scrutiny in a volatile market.
Chipmaker Advanced Micro Devices (AMD) saw its shares drop 9% in early premarket trading following a first-quarter forecast that didn't meet analyst expectations. The company reported a revenue of $10.27 billion for the fourth quarter, surpassing LSEG consensus estimates of $9.67 billion. Despite this strong quarterly performance, AMD's projected revenue of $9.8 billion for the upcoming quarter, with a margin of plus or minus $300 million, fell short of the anticipated $9.38 billion. Some analysts had anticipated stronger guidance, particularly given the ongoing surge in demand for processors necessary for artificial intelligence (AI).
AMD, a key player in the AI chip market alongside Nvidia, has experienced a stock surge of over 100% in the past year, fueled by increasing demand. According to Chris Rolland from Susquehanna, expectations were exceedingly high. "First, expectations were pretty sky high," he stated on CNBC's "Closing Bell Overtime." Rolland pointed out that AMD's unexpected shipment of Chinese revenue contributed to a perception that the revenue beat was less significant than analysts had hoped.
Despite the forecast disappointment, demand for AMD's chips in data centers remains robust, with the company hinting at potential multi-gigawatt contracts in the future. Notably, AMD secured a deal with OpenAI in October that could allow the startup to acquire a 10% stake in the company. OpenAI plans to deploy 6 gigawatts of AMD's Instinct graphics processing units over several years, beginning with an initial rollout of 1 gigawatt of chips in the latter half of 2026. Additionally, Oracle announced its plans to implement 50,000 of AMD's AI chips starting later this year.
The dip in AMD's stock reflects the volatility and high expectations surrounding the tech sector, particularly in AI. Investors are keenly aware that even slight misses in forecasts can lead to significant reactions in stock prices. As AMD navigates this landscape, its ability to deliver on future contracts and maintain strong demand will be critical. The current situation underscores the delicate balance between investor expectations and corporate performance in a rapidly evolving market.
In summary, while AMD's quarterly results showcased strong revenue, the mixed outlook has raised concerns among investors. The company must manage expectations carefully as it capitalizes on the booming AI market. This situation serves as a reminder of the intense scrutiny facing tech companies and the potential market volatility that can arise from unmet expectations.