AMD shares experienced a significant decline of 9% in after-hours trading on Tuesday following the release of disappointing data center sales figures, which fell short of Wall Street’s expectations. The company reported strong fourth-quarter profit and revenue numbers; however, the lower-than-expected performance of its data center segment, a key area linked to artificial intelligence (AI) revenues, overshadowed these results.
AMD Chief Executive Lisa Su indicated that data center sales are expected to contract by about 7% in the current quarter. Although no specific projections were made for AI chip sales, Su expressed optimism regarding future revenues, anticipating “tens of billions” of dollars in sales over the next few years.
The stock’s performance has been troubling in the past year, as it has lost about a third of its value, primarily due to difficulties in competing against Nvidia, a leader in the lucrative AI chip market. Following the earnings report, AMD’s shares dropped to approximately $109.
Analysts point out that AMD shares have been trending downward since falling below the 200-day moving average in October of the previous year. A technical analysis of the stock reveals several crucial support levels to watch closely. The first significant support level is around $110, marked by a trendline connecting previous peaks and troughs. A decisive fall below this level could expose the shares to further declines, possibly reaching $95 and even down to $81, which is about a 32% decrease from Tuesday’s closing price.
On the other hand, should the stock stage a recovery, the $130 level could act as a resistance point, presenting selling pressure from multiple peaks seen in the past.
Despite the recent challenges, there is room for hope, especially with the potential growth in AI chip sales over the coming years. AMD’s efforts to strengthen its position in the AI market could pay off if the company successfully navigates the current hurdles. Investors will be closely watching the market’s response to AMD’s next steps in this evolving landscape.