Advanced Micro Devices (AMD +11.44%) stock saw a big valuation pullback Wednesday. The semiconductor company's share price ended the day's trading down 7.4% amid a 2.3% decline for the S&P 500 and a 3.1% decline for the Nasdaq Composite. Earlier in the session, the stock had been down as much as 10.5%.
NASDAQ: AMD
Key Data Points
AMD disclosed yesterday that sales of its MI308X processor to China were now effectively banned and that it expected to take an $800 million write-down as a result. Unfortunately, that wasn't the only bearish news for investors.
AMD faces new export restrictions and the threat of higher costs
Due to new U.S. policies, AMD will require an export license in order to sell its MI308X artificial intelligence (AI) processor into the Chinese market. Because it's unlikely that the export license will be granted, the company is essentially barred from selling the processor to Chinese customers and anticipates taking an $800 million loss on inventory.
Adding another potential bearish catalyst, TSMC will reportedly raise the price on its 4nm chips by 30% in response to high levels of demand. AMD relies on TSMC to manufacture its chip designs and could wind up facing significantly higher costs as a result.
Macro pressures also weighed on AMD stock today
Late yesterday, the Trump administration said that tariffs on Chinese goods would be going up to 245% -- up from the previous level of 145%. With the trade war between the U.S. and China continuing to escalate, investors reduced exposure to chip stocks in today's session.
Traders also got some less than comforting commentary from Federal Reserve Chairman Jerome Powell today. Due to the potential that new tariffs could both weaken economic growth and accelerate inflation, Powell says that the Fed will be taking a wait-and-see approach to interest rate cuts.
