AMD Stock Falls 8.1% as AI Spending Fears Spread to Chipmakers

The artificial intelligence sector is facing growing pressure, and the selling has reached major chip suppliers. While some smaller players have seen steep declines this year, the recent drop in AMD shares signals that investors are worried about the pace of spending in the industry.

AMD stock fell 8.1% last Thursday. This move followed news that Meta is financing new infrastructure projects and a supply warning from Lam Research. These developments raised concerns about the speed of data center construction and overall AI capital expenditure.

The drop is part of a wider trend in the sector. CoreWeave shares fell 15.5% on October 14 when the yield on its 2032 notes hit 15%. Its default-swap spreads also nearly doubled in October. IREN is down more than 20% for the year.

Despite the recent decline, analysts expect AMD to report strong results next week. Consensus estimates for the third quarter call for earnings per share of $1.94. Revenue is expected to reach $13.06 billion. A year ago, those figures were $1.20 per share and $9.25 billion in revenue, respectively. This represents year-over-year growth of nearly 62% for earnings and 41% for revenue.

Lisa Su, the chief executive of AMD, stated on October 6 that the company will substantially increase supply in 2027. She explained that AI orders continue to outstrip the company's current production capacity. The recent stock drop came from general sector selling rather than any specific negative news from AMD.

Investors are looking for ways to manage the risk of holding a volatile stock. The market implies an earnings-related move of 9% to 11% for AMD on the day it reports. Over the last four quarters, the smallest move in a similar window was more than 9%. The largest move, after the company reported its first quarter of 2026 results, was 38%.

Some traders are using options to balance risk and reward. A call spread risk reversal can reduce the cost of buying protection. This strategy involves selling options to offset the high premiums caused by recent volatility. One analysis suggests that sacrificing about $1,700 of potential upside could protect $5,000 in value during a severe drop.

This approach ties up less cash than buying the stock outright. Selling both the out-of-the-money option and the call reduces the cost of a long call purchase by 66%. The strategy allows investors to remain in the position with less exposure to the sector's current instability.

The company's financial growth remains strong even as the broader AI trade shows cracks. AMD is one of the few names reporting in the next two weeks that meets strict criteria for revenue and earnings growth. The stock's performance will likely depend on how the market reacts to these upcoming numbers.