Shares of chipmaker Advanced Micro Devices (AMD) tumbled on Wednesday after the company's earnings failed to meet Wall Street's lofty expectations. As of press time, AMD's stock price fell 17%, which may be the largest percentage decline since 2017.
The company reported after the close on Tuesday that fiscal fourth-quarter revenue was $10.27 billion, driven by a boom in its data center business, above the $9.69 billion expected by analysts polled by FactSet.
But the company's fiscal fourth-quarter results beat expectations in large part because of unexpected chip sales from China, and some analysts expressed concern about rising spending. Other analysts were disappointed with AMD's fiscal first-quarter sales outlook.
"We believe investor expectations may have become overly optimistic," a team of analysts at TD Cowen wrote, adding that under any other circumstances the earnings would have been viewed as "very solid."
Investors have been harsh on stocks involved in the AI arms race lately, especially in the past few months, as concerns have grown about the durability of the wave of deals. AMD's rivals, such as Nvidia, also saw their share prices fall after reporting good but still not good financial results.