AMD Shares Tumble on Weak Outlook


Shares of Advanced Micro Devices Inc fell as much as 9 percent in early trading after the chipmaker slashed its sales outlook, prompting a slew of brokerages to cut their price targets on the stock.

AMD and other chipmakers are grappling with slowing demand, as consumers shift to mobile devices and economic growth weakens in Europe and emerging markets.

Continue Reading Below

Chip gear maker Applied Materials Inc also cut its full-year sales outlook on Tuesday morning, sending its shares down 6 percent on the Nasdaq.

The companies joined software firms Qlik Technologies Inc and Informatica Corp in issuing estimates below market forecasts — an early indication of potentially weak results from tech companies this earnings season.

AMD said on Monday second-quarter revenue may slide 11 percent from the first quarter, reflecting disappointing sales in Europe and China.

The company, which faces competition from Intel Corp's newest personal computer chip -- code-named Ivy Bridge -- will likely remain under pressure due to its low market share and Intel's superior products, J.P. Morgan said in a client note.

Intel said in April that Ivy Bridge would drive sales later this year and power a new crop of super-thin laptops dubbed "ultrabooks."

"We suspect second quarter marks the worst quarter of the year (for AMD), exacerbated by the impact of Intel's Ivy Bridge launch," Citigroup analysts said.

The analysts said they do not expect Intel to miss estimates when it reports next week.

Intel on Monday said it would spend more than $4 billion to buy up to 15 percent Dutch chip-gear maker ASML Holding NV and fund its research into costly next-generation chipmaking technology.

AMD's shares, which have lost 40 percent of their value after touching a year-high in March, were trading down 8 percent at $5.16 on the New York Stock Exchange. The stock was among the biggest percentage losers on the exchange on Tuesday morning.