AMD, Super Micro shares slide as AI bets falter on data center results miss

By Rashika Singh

Aug 6 (Reuters) - Shares of chip company Advanced Micro Devices AMD.O and server maker Super Micro Computer SMCI.O tumbled in early trading on Wednesday after the companies posted underwhelming results in their data center segments, shaking investor confidence in their AI growth narratives and competitive positions.

AMD dropped 5.1%, while Super Micro plummeted about 18.2%. The selloff comes as both companies face strong competition and high investor expectations in a sector that has been a linchpin of market growth.

If losses hold, Super Micro is poised to shed more than $6 billion in market value.

Investors had pushed up AMD and Super Micro's stocks much faster than those of rivals so far this year.

AMD's double-digit growth in data center revenue paled in comparison to bigger rival Nvidia's expansion, while analysts said Super Micro appeared to be losing market share to bigger server makers Dell and HP.

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, which 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.

In addition, the industry faces the threat of new U.S. tariffs on semiconductor imports, expected as early as next week.

Last month, ASML ASML.AS, the world's biggest supplier of chip-making equipment, and TSMC 2330.TW, the world's main producer of advanced AI chips, and mobile chip designer Qualcomm QCOM.O cautioned about tariff-related uncertainty.

AMD faces potential technology and political risks from its reliance on the Taiwanese chipmaker, said Michael Ashley Schulman of Running Point Capital Advisors. "The advanced 3-nanometer wafers come from a single source (TSMC)—any slowdown there hits AMD first" he said.

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.

Dell and HP have been successful in boosting server sales in a healthy market, and Super Micro's results suggested the company was losing market share, D.A. Davidson analyst Gil Luria said.

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 NVDA.O, 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. Dell DELL.N shares fell about 1.7%.

AMD commands a higher forward price-to-earnings multiple of 32.39, compared to SMCI that trades at a more modest 19.69.