AMD falls 9% after hours as Q2 capex triples estimates

AMD reported second-quarter capital expenditure of $808 million, nearly triple the $298.6 million consensus estimate, sending shares down more than 9% in after-hours trading.

The spending overrun points to aggressive investment in AI infrastructure that may pressure near-term margins. "We believe the sell-off today is largely a knee-jerk reaction and overdone," said Jing Jie Yu, equity analyst at Morningstar, referring to the broader chip sector decline.

AMD had guided second-quarter revenue to about $11.2 billion, plus or minus $300 million, implying roughly 46 percent year-over-year growth. In the first quarter, total revenue reached $10.3 billion, up 38 percent, with data center segment revenue growing 57 percent to $5.8 billion and adjusted EPS rising 43 percent to $1.37.

The stock closed at about $476 before the report, roughly 19 percent below its 52-week high of $584.73, giving AMD a market capitalization of about $776 billion. The after-hours decline extends a global chip selloff that has hit semiconductor stocks worldwide.

The capex figure of $808 million compares with a consensus estimate of $298.6 million, according to data compiled by Cailian Press. The overrun suggests AMD is spending heavily on manufacturing capacity and AI accelerator development, a bet that may not translate into immediate revenue.

AMD's data center segment, which includes EPYC server processors and Instinct AI accelerators, delivered $5.8 billion in Q1 revenue, accounting for more than half of total sales for the second consecutive quarter. The segment's 57 percent growth rate has been the primary driver of the company's earnings expansion.

The broader semiconductor sector has been under pressure as investors question whether AI-driven demand can sustain current growth rates. Micron Technology dropped 8.9 percent and Applied Materials lost 7.8 percent in recent sessions, while South Korea's Kospi index sank 10.8 percent on heavy selling of Samsung Electronics and SK Hynix.

Several major AI infrastructure spenders are scheduled to report quarterly results this week. Meta Platforms and Microsoft report on Wednesday, with Amazon due on Thursday. Their capital expenditure guidance will provide a read on whether the AI buildout continues at current levels.

The capex overrun raises questions about AMD's margin trajectory even as revenue growth accelerates. Investors will watch the company's Q3 guidance and earnings call for clarity on whether the spending is a one-time investment or marks a sustained increase in capital intensity.

This article is for informational purposes only and does not constitute investment advice.