Why AMD Stock Plunged Nearly 10% on Friday

What happened

AMD stock fell nearly 10% in Friday morning trading after Intel, its biggest PC processor rival, forecast a difficult stretch for personal computer sales. AMD reports earnings on Nov. 3, and investors are now questioning whether chip demand can hold up.

Confirmed

Global impact / market context

Intel's warning that memory supply limits and cautious corporate spending are hurting PC orders can spread to AMD because both sell PC processors. Weaker PC demand could reduce AMD's sales and profit, even as two firms still favor its data center growth.

Analyst inference

AMD's drop shows investors reacting to a rival's outlook as a signal about the whole chip industry, not just Intel. Jefferies kept a $650 target and Susquehanna raised its target to $650, so some analysts still see data center computing supporting AMD.

Analyst inference

What to watch

1. Watch AMD's Nov. 3 earnings report for whether its own demand holds up after Intel's weak PC forecast. Confirmed
2. Watch whether memory supply constraints ease, since Intel said they are limiting PC orders and could keep weighing on chip demand. Proposed
3. Watch data center sales growth, because Jefferies and Susquehanna cited it as the reason to stay positive on AMD despite the PC weakness. Analyst inference

Evidence

• gurufocus.com