Advanced Micro Devices (AMD) saw its stock drop nearly 16% this month. This marks the chipmaker’s weakest monthly performance since September 2022. The decline followed a mix of rising market concerns, higher costs, and fresh signs of chip competition.
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At the same time, the company reported record revenue of $9.25 billion in the third quarter. That figure was up 36% from a year ago. AMD also gave positive guidance for the fourth quarter. Chief Executive Officer Lisa Su said the company expects its data center segment to grow at an average of 80% per year, driven by increasing demand for AI chips.
Meanwhile, AMD shares exhibited a slight resurgence on Wednesday, rising 3.93% to close at $214.24. Still, the stock is up 77% so far in 2025.
Market Worries Focus on Competition and Costs
However, even with strong financials, pressure on the stock has risen in recent weeks. One trigger came from reports that Meta (META) is in talks to buy TPU chips from Alphabet (GOOGL). The chips are intended for use in Meta’s data centers.
This shift raised new concerns for AMD. Google’s chips could cut into future demand for both AMD and its biggest rival, Nvidia (NVDA). Analysts at Mizuho called the deal a modest challenge. Consequently, shares of AMD fell more than 4% following the news.
In addition to competition, cost pressure is growing. Prices for memory chips are rising sharply. For example, DRAM contract prices increased 171% year-over-year in the third quarter. This jump came as chipmakers shifted supply toward high-end AI chips. Forecasts suggest DRAM prices could rise by 30% by the end of 2025 and by an additional 20% in the first half of 2026.
Valuation Concerns Add to the Pullback
Wider concerns in the stock market have also added weight. A recent report from the European Central Bank warned that investors’ FOMO (fear of missing out) is driving up technology stock valuations in the U.S. Some analysts say between 15% and 25% of the S&P 500’s (SPY) market value could be tied to expectations for AI growth. These expectations may not fully play out.
In conclusion, the selloff reflects rising uncertainty, but not a decline in company performance. The next few quarters will show how AMD handles new competition and shifting demand trends in AI chips.
Is AMD Stock a Buy?
On the Street, Advanced Micro Devices has a Moderate Buy consensus rating, based on 38 analysts’ ratings. The average AMD stock price target is $284.67, implying a 32.87% upside from the current price.
