AMD Needs a Huge Outlook to Avoid Intel’s Fate as AI Fears Rise

Advanced Micro Devices Inc. is one of this year’s best-performing chip stocks, but with skepticism about artificial-intelligence spending on the rise, it could use strong results and an aggressive outlook to maintain the momentum when the firm reports earnings Tuesday afternoon.

“What’s needed for it to keep on humming is not just a beat, but a significant beat that comes with a pretty significant outlook,” said Neville Javeri, portfolio manager at Allspring Global Investments, which owns the stock. “A modest report just won’t cut it.”

While Wall Street expects a strong report from AMD, it lands at a time when investors have been quick to sell disappointment. Intel Corp. had its worst day in the stock market on Friday based on data going back to 1982, because of its weak outlook. And prior to that, big AI spenders like Alphabet Inc., Meta Platforms Inc. and Amazon.com Inc. have seen their shares punished because their massive commitments are eating away at cash flows.

Like AMD, Intel had been a significant outperformer this year as AI spending drove demand for its central processing unit, or CPU, chips. Prior to its report, Intel was up 150% in 2026. But by the end of trading on Monday, that gain was cut to 63%.

Read More: AI Enthusiasm Is Collapsing and Tech Earnings Just Made It Worse

AMD shares have sold off in sympathy with Intel, losing 10% on Friday to close October down more than 17%. But they’re still up about 118% for the year, far outpacing the 46% gain in the Philadelphia Stock Exchange Semiconductor Index, better known as the SOX.

The rally has made AMD’s stock look relatively expensive compared with shares of other chipmakers. It’s trading at 32 times profits estimated over the next 12 months, which is the fourth-highest multiple in the SOX. That’s down from a high of 56 on June 30. However, AMD is traditionally a pricey stock, with an average multiple of around 34 since 2017.

Wall Street analysts expect AMD to report a 92% jump in third-quarter earnings on a 41% rise in revenue, and both figures are projected to increase further in 2027. The company is anticipating “very high” chip demand that exceeds supply over the coming few years, Chief Executive Officer Lisa Su said last month.

CPUs play a critical role in AI infrastructure because they’re crucial to the functioning of so-called agents, which have taken the market by storm thanks to the success of Meta’s Muse. The chips were responsible for nearly a quarter of AMD’s 2025 revenue, according to data compiled by Bloomberg.

Meta is AMD’s second-largest customer, accounting for 5.5% of the chipmaker’s revenue, according to supply chain data compiled by Bloomberg. Muse’s popularity has led some analysts to raise their targets for the chipmaker, which was named the top long idea going into earnings by Rosenblatt Securities analyst Kevin Cassidy.

“Investors need to see evidence that growth is accelerating, and Muse absolutely is a credible catalyst,” Allspring’s Javeri said.

This would explain why Wall Street’s consensus expectations for AMD’s 2027 net income have risen 23% over the last three months and estimates for revenue are up 14%, with even stronger gains seen in 2028. The stock is expected to rise 40% over the next 12 months based on the average of analysts’ price targets tracked by Bloomberg.

The biggest risk for AMD heading into its report may be the deteriorating sentiment around the AI trade and investors’ skittishness about any disappointment. The negative reaction to AI capital expenditures in the earnings reports by AI hyperscalers over the past two weeks is raising fears of a spending pullback, which would deeply affect chipmakers like AMD that are relying on that largesse continuing.

Jim Worden, chief investment officer at the Wealth Consulting Group, exited his AMD position because of the uncertain backdrop and the stock’s high valuation, but he continues to hold other chipmakers like Nvidia Corp., Broadcom Inc. and Taiwan Semiconductor Manufacturing Co.

“It’s possible we’re in a period where AMD goes from good growth to hypergrowth, with things like Muse acting as an accelerator, but I’m just not super comfortable with the valuation,” he said. “There are just too many questions.”

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