Shares of Intel (INTC) and Advanced Micro Devices (AMD) are bleeding red this morning amidst a broader macro-driven sell-off across the US semiconductor names.
Investors seem to be taking profit following parabolic multi-week rallies that have seen valuations soar to historic extremes.
In fact, UBS analysts labeled current multiples as “statistical outliers” – flashing bubble-like signals in a research note today.
Plus, this mass exit is being exacerbated by defensive positioning ahead of Nvidia’s “high-stakes” quarterly results scheduled to be revealed on May 20.
With a 95% probability of a “beat and raise” already priced into the market, investors are choosing to de-risk across the entire AI complex rather than gamble on further upside.
Why AMD stock is slipping today
While AMD remains a favourite of the AI revolution, it’s currently buckling under a surge of macro volatility.
The 10-year Treasury yield climbed to a new high on Friday, draining liquidity from high-growth tech stocks whose future earnings are now being discounted at a higher rate.
Compounding this “risk-off” sentiment are escalating Middle East tensions involving Iran – which have spiked Brent crude prices and revived fears of “sticky” inflation.
Consequently, the futures market is now pricing in higher odds of a Fed “rate hike” rather than the long-awaited cut, a scenario that is toxic for capital-intensive industries like chip manufacturing.
Adding fuel to the fire on May 15 is a new report from UBS, warning that the AI server gold rush is entering a hyper-competitive phase.
As Arm-based chips and custom silicon gain traction, analysts fear the margins for traditional x86 CPU players could be squeezed, forcing a re-evaluation of AMD shares’ premium multiple.
Why Intel shares are crumbling today
Beyond the aforementioned macroeconomic headwinds, Intel stock is also seeing pressure because of a more localized catastrophe.
UBS data reveals a staggering blow to its core business: Intel’s server CPU market share has tanked to 54.9%, marking a brutal sequential decline of 370 basis points.
The losses aren’t just in the data center; whispers in the valley suggest that INTC’s much-vaunted foundry partnership with Apple is significantly smaller in scope than investors had hoped.
Reports now indicate the deal may be restricted to legacy, lower-end components only, rather than flagship 2nm mobile processors.
This has left Intel vulnerable, as it has been the highest-beta name in the semiconductor group this year.
Because of this massive overextension, INTC is leading the pullback in semiconductor names – as the “first in, first out” mentality takes hold among institutional investors looking to protect year-to-date gains.
At the time of writing, Wall Street firms have a consensus “hold” rating on Intel, with a mean price target of just $83, signaling potential downside of another 23% from here.
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