By Rashika Singh
(Reuters) -Shares of chip company Advanced Micro Devices and server maker Super Micro Computer tumbled in premarket trading on Wednesday after the companies posted underwhelming results in their data center segments, shaking investor confidence in their AI growth narratives.
AMD dropped 7%, while Super Micro plummeted about 17%. The selloff comes as chipmakers face mounting headwinds, including weak demand, rising inventories, and the threat of new U.S. tariffs on semiconductor imports, expected as early as next week.
Last month, ASML, the world’s biggest supplier of chip-making equipment, and TSMC, the world’s main producer of advanced AI chips, and mobile chip designer Qualcomm also cautioned about tariff-related uncertainty.
Analysts said that given the strength of the overall server market, Super Micro’s disappointing results likely reflect market share losses to larger rivals
SMCI peer Dell down about 3%.
CHINA DRAG, MI308 IN SPOTLIGHT
AMD’s data center unit, which includes its Instinct AI chips and server processors (CPUs), posted a 14% revenue rise to $3.2 billion in the second quarter, slightly below market expectations.
“AI outlook did not show the sort of upside some investors were looking for,” said Jefferies analysts.
In contrast, Nvidia’s data center segment jumped 73% to $39.11 billion in its fiscal first quarter.
Chipmakers have benefited from Big Tech’s AI spending spree, as these chips power their massive AI infrastructure, that has propelled AMD’s shares to surge over 40% this year.
In a post-earnings conference call, AMD CEO Lisa Su said the company’s AI chip revenue declined year-over-year because of the U.S. restrictions on export of its MI308 chips to China.
The company noted progress on export license reviews for the chips, but gave no clear timeline for lifting the restrictions.
“Potential addback of MI308 revenues from lifting of export restrictions also appears to be more muted than market expectations,” HSBC added.
SUPER MICRO: MARGIN SQUEEZE, GUIDANCE MISS
Super Micro missed fourth-quarter estimates as it competes with larger rivals in AI server hardware, with execution missteps and Nvidia chip delays weighing on its performance.
Analysts said any weakness in the high-expectation AI space tends to spark sharp investor backlash.
“We expect better chip availability this fiscal year compared to the last two quarters, which will help us grow better,” Super Micro CEO Charles Liang said on the post-earnings call.
J.P.Morgan analysts noted that AI remains the “preeminent driver of sales growth,” with over 70% of fourth-quarter revenue tied to AI platforms.
Super Micro, seen as a proxy for Nvidia, and larger rival Dell have benefited from rising demand for AI servers, but the high cost of producing them and tough competition have pressured their margins.
“Gross margin impact (for Super Micro this quarter) remains unclear,” BofA analysts noted.
AMD commands a higher forward price-to-earnings multiple of 32.39, compared to SMCI that trades at a more modest 19.69.
(Reporting by Rashika Singh and Siddarth S in Bengaluru; Editing by Shinjini Ganguli)
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