AMD's Stock Tumbles Toward Worst Day In Over 12 Years

By Tomi KilgoreMarketsMarketWatch Pulse

Shares of Advanced Micro Devices Inc. plunged 19% on in active morning trade Tuesday, putting them on track to suffer the biggest one-day loss since Jan. 11, 2005, as investors expressed disappointment over the chipmaker's margin outlook. Volume spiked above 80 million shares within the first half hour after the open, already above the full-day average of 52.6 million shares and enough to make the stock the most actively traded on major U.S. exchanges. The company reported late Monday first-quarter results that were mostly in line with expectations, but investors were hoping for a bit more. "AMD's new products are beginning to accelerate growth, but perhaps without all the gross margin benefits we had hoped for," wrote analyst Christopher Rolland at Susquehanna Financial in a note to clients. UBS analyst Stephen Chin wrote: "We keep a sell rating on the stock as we see limited EPS growth near term to support its high multiple as it needs to invest heavily to keep pace with Intel and Nvidia." The stock has lost 3.1% year to date, while Intel Corp. shares have gained 3.7%, Nvidia Corp.'s stock has eased 3.2% and the S&P 500 has gained 6.6%.

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