AMD Outperforms AI-Rivals Despite Downturn

Advanced Micro Devices Inc. (AMD) defied market trends last week as its shares outperformed rivals like Nvidia Corp. While the semiconductor sector experienced a sell-off, AMD saw a 2.4% increase in shares on Friday, closing at $115.82. Throughout the week, AMD experienced a 2.6% overall gain. In contrast, Nvidia shares only gained 0.4% on Friday, closing at $446.80, but ultimately suffered a loss of 4.4% for the week. The PHLX Semiconductor Index (SOX) also declined by 0.2% on Friday, resulting in a weekly drop of 4%. Nvidia is scheduled to report its earnings on August 23 after the market closes.

The midweek proved challenging for technology stocks, as their previous notable gains turned into substantial losses in relation to the broader market. Fitch Ratings reduced its top credit rating for the United States from AAA to AA+ late on Tuesday, contributing to the downturn. High-performing stocks such as Nvidia, which experienced over 200% gains this year, and chip-related stocks, with the SOX index rallying over 45%, all faced significant declines on Wednesday. This downward trend also affected AMD shares, which had been on an upward trajectory after the company's positive earnings report.

Despite the negative impact on the rest of the sector, AMD received a wave of analyst support, making it one of the few winners among chip stocks for the week. Benchmark analyst Cody Acree identified AMD as "among the best positioned companies" to capitalize on artificial intelligence (AI) advancements. Additionally, Morgan Stanley analyst Joseph Moore released a note on Thursday praising AMD's performance and stating that the post-quarter sell-off presents a valuable buying opportunity. Moore maintains an overweight rating on AMD and has set a price target of $138.

In the note, Moore highlights that AMD's quarter results dispelled concerns about server performance and unrealistic expectations for margin recovery in the PC market. Despite apprehension from some analysts about the company's high expectations, AMD's positive performance and analyst support have solidified its position in the market.

Overall, despite market challenges, AMD showcased its resilience and promising prospects in the AI and semiconductor sectors.

Qualcomm Stock Faces Challenges Amid Chip Glut and Lackluster Earnings

Qualcomm Inc. (QCOM) experienced a difficult week, with its shares seeing a 6.2% decline after the phone handset supplier reported ongoing inventory drawdowns. This setback comes as other chip makers face similar challenges in the current market.

Meanwhile, Advanced Micro Devices (AMD) is generating substantial interest in its MI300 class CPU + GPUs, particularly in the coveted AI data-center category. However, AMD CEO Lisa Su acknowledges that the timing of qualifications for this product remains uncertain.

According to Su, there will undoubtedly be surprises and challenges when introducing new silicon. Additionally, she believes that competitors like Nvidia will not aggressively price their inference products to challenge AMD's offerings, but they will be fully engaged in the market once the initial interest in AMD's products begins to translate into wins.

Despite the uncertainties, analysts remain optimistic about AMD's prospects in the AI market. Of the 45 analysts surveyed by FactSet, 30 have buy ratings on AMD stock, while 15 have hold ratings. The average price target for AMD stands at $140.42.

In broader market news, the S&P 500 index declined by 0.5% on Friday, resulting in a 2.3% decrease for the week. Similarly, the tech-heavy Nasdaq Composite slipped by 0.4%, finishing the week down 2.9%.