AMD Shares Fall 8.1% as AI Spending Fears Grip Chipmakers

Advanced Micro Devices, Inc. (AMD) shares declined by 8.1% on Thursday as investors reacted to new financing plans from Meta Platforms Inc. and a supply warning from Lam Research.

The drop signals that anxiety over the pace of artificial intelligence spending is now affecting major chipmakers, not just smaller infrastructure firms. This follows a sharp 15.5% fall for CoreWeave on October 14, when yields on its 2032 notes hit 15% and its default-swap spreads nearly doubled. IREN has also lost more than 20% of its value this year. Much of the capital deployed by these infrastructure players goes toward purchasing chips, creating a direct link between their financial stress and the chip sector.

Despite the recent sell-off, AMD remains a standout candidate for investors seeking growth within the volatile AI trade. A screen for companies with price above the 200-day moving average, revenue growth of at least 5% per year, earnings per share growth of at least 7%, rating upgrades, a price-to-earnings-growth ratio below 3, and return on equity and invested capital of at least 12% leaves AMD as the only name reporting in the next two weeks that meets all criteria.

The company's fundamental growth metrics exceed these benchmarks. Consensus estimates for the third quarter call for earnings per share of $1.94 on revenue of $13.06 billion. This compares to $1.20 in earnings per share and $9.25 billion in revenue a year ago. The projected year-over-year growth rates are nearly 62% for earnings and 41% for revenue. CEO Lisa Su stated on October 6 that AMD would substantially increase supply in 2027 because AI orders continue to outpace available capacity.

The recent price drop stems from a sector-wide selloff rather than a specific weakness in AMD's reported results. However, the incident illustrates that larger players in the space can feel the impact when other names come under pressure. For investors, this volatility creates a specific challenge: owning the stock outright requires absorbing a roughly 9% to 11% implied move on earnings day.

Historical data suggests this volatility will persist. Over the past four quarters, the smallest share price move in a similar window was over 9%, while the largest move, following Q1 2026 results, reached 38%. This level of movement makes options expensive, yet the premium is also a reason against simply buying call options.

One strategy to manage this risk involves a call spread risk reversal. This approach reduces potential losses if the sector's cracks widen, while the short options offset the high volatility costs. By sacrificing approximately $1,700 of potential upside, an investor can secure $5,000 in protection against a severe downside move. This structure ties up less cash than buying the stock outright and reduces the cost of purchasing long calls by 66%.

Tidal owns all the securities mentioned in this analysis. The views expressed are those of the contributor and do not reflect the opinions of CNBC or its parent company.