Advanced Micro Devices (AMD +2.72%) stock is getting hit with a significant pullback in Friday's trading. The chip company's share price was down 6% as of 1 p.m. ET, and had been off as much as 7.2% in the daily session.
NASDAQ: AMD
Key Data Points
AMD stock is getting hit with multiple bearish catalysts today. For starters, the latest U.S. jobs report arrived with much weaker employment growth than economists had forecasted. Total nonfarm jobs increased by just 22,000 in the month, far short of the 75,000 additions economists had expected. Even though the soft jobs numbers support a potential cut in interest rates from the Federal Reserve this month, the report is making investors nervous about the state of the U.S. economy.
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AMD's valuation is also under pressure today due to confirmation from the Trump administration that tariffs will be imposed on semiconductors manufactured outside the country. AMD relies on Taiwan Semiconductor Manufacturing for the fabrication of most of its designs, and it's likely that the company could face margin pressures if and when the new tariffs go into effect.
Is AMD stock a buy right now?
While AMD has continued to win market share away from Intel in the central processing unit (CPU) market, the most important long-term catalyst for its stock continues to be performance in graphics processing units (GPUs) for artificial intelligence (AI). Nvidia continues to be the far-and-away leader in the AI GPU category, which helps explain why it's been able to command margins that are far superior to what AMD has been able to muster.
Nvidia seems to be maintaining a significant technology advantage compared to AMD, and that may not change any time in the near future. On the other hand, AMD appears to have a solid second-place position in the category -- and that could be enough to power big gains for its stock over the long term. AMD stock isn't a low-risk bet, but it appears to offer a favorable risk-reward dynamic at current prices.
