Advanced Micro Devices (AMD, Financial) suffered a 3% drop in its stock price earlier this week due to Morgan Stanley’s warning on the firm’s AI supply chain direction, implemented by ordering fewer chips from the Taiwanese outsourcing giant TSMC (TSM, Financial) for 2025. A range of concerns are related to the unknowns of the firm’s demand for MI325 processors, which signals a more cautious approach towards the demand for AMD AI processors.
Morgan Stanley noted that Nvidia (NVDA, Financial)) has quickly seized the occasion, which clearly demonstrates Nvidia’s assertiveness in AI. This development points to increasing competitive pressures within the semiconductor industry, where companies like Marvell Technology (MRVL, Financial) and Micron Technology Inc. (MU, Financial) have greatly boosted their bookings in sharp contrast to AMD’s reserved approach.
Furthermore, Intel’s (INTC, Financial) Habana division continued to report steady wafer bookings, affirming its expectations in AI manufacturing capabilities. Such a diverse approach practised across the sector speaks of more general tendencies towards shifts and adaptations as companies cope with the instability and rivalry inherent in the world of technology.
Nevertheless, the rate of return on AMD’s stock for the current year is still positive, and the company today is trading with a 5.9% gain. This fluctuation is typical for the broader semiconductor industry, which is defined by the high volatility of companies’ strategies and market positions in response to tendencies in demand and technological progress.
This article first appeared on GuruFocus.