Shares of Advanced Micro Devices (AMD -7.04%) sank on Wednesday after a major customer said it would buy its artificial intelligence (AI) chips from a rival chipmaker.
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Q2 results were solid
AMD's second-quarter performance would be the envy of most businesses. Revenue jumped 50% year over year to $11.5 billion. Gross profit leaped 95% to $6.5 billion. Operating income surged 245% to $3.1 billion. And earnings per share soared 246% to $1.66, topping Wall Street's estimates of $1.61.
"AI is driving a significant expansion in demand for compute across all of our markets," CEO Lisa Su said.
NASDAQ: AMD
Key Data Points
AMD's data center division was the star of the show, with revenue more than doubling to $6.7 billion, fueled by booming demand for the company's EPYC processors and Instinct GPUs.
AMD is partnering with many of the leading AI computing providers, including Microsoft, Meta Platforms, Oracle, OpenAI, and Anthropic -- all of which welcome the challenge to Nvidia's AI chipmaking throne.
AMD expects more gains in the third quarter, with revenue projected to grow roughly 41% year over year to $13 billion.
Some investors, however, apparently wanted even faster growth.
Praising the enemy
It also didn't help that industry kingpin Elon Musk said that SpaceX planned to buy its AI chips from Nvidia.
Going forward, we've decided to build exclusively on Nvidia, because we think the Vera Rubin architecture is the best architecture. We think it's the best AI computer, and we greatly value our close cooperation and partnership on many levels with Nvidia.
Having a key customer make such a declarative statement about your main competitor is not great. And many investors, worried about the implications of Musk's comments, decided to sell their AMD shares.
