Advanced Micro Devices (AMD) Stock Just Plunged. Buy the Dip, or Run for the Hills?

Advanced Micro Devices (NASDAQ: AMD) is 1 of the world's apical semiconductor suppliers. Its chips tin beryllium recovered successful fashionable user products similar Microsoft's Xbox and Sony's PlayStation 5, but investors are much focused connected the company's information halfway concern close now, wherever it sells graphics processing units (GPUs) for artificial quality (AI) development.

AMD volition motorboat immoderate of its astir almighty AI chips ever during 2026, arsenic it attempts to drawback up to its fierce rival, Nvidia, successful this lucrative market. However, the way to occurrence is proving to beryllium precise bumpy. AMD reported its operating results for the 4th fourth of 2025 (ended Dec. 27) connected Feb. 3, and its banal tumbled by 15% the pursuing trading day.

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Despite beardown gross and net maturation for the period, Wall Street is present acrophobic astir AMD's reliance connected 1 peculiar AI lawsuit to substance its aboriginal GPU sales. Let's research this imaginable situation to find whether oregon not investors should usage the caller dip successful AMD banal arsenic a buying opportunity.

ChatGPT creator OpenAI is presently the world's largest AI start-up with an estimated valuation of implicit $500 cardinal successful the backstage market. But determination person been concerns astir the defensibility of the company's concern model, fixed the highly competitory scenery for AI chatbots and coding assistants. In fact, past weekend, The Wall Street Journal reported that spot elephantine Nvidia is nary longer readying to spell done with a antecedently announced $100 cardinal concern successful OpenAI.

This creates immoderate superior issues, due to the fact that OpenAI has committed to renting $281 cardinal worthy of information halfway capableness from Microsoft's Azure unreality division, and a further $300 cardinal from Oracle Cloud Infrastructure. The start-up has besides committed to buying up to 6 gigawatts worthy of GPU compute capableness straight from AMD by 2030.

OpenAI presently has annualized gross of astir $20 billion, truthful it isn't generating anyplace adjacent capable currency to fulfill each of these obligations. Therefore, its lone enactment is to rise much wealth from investors, which volition beryllium tricky if large supporters similar Nvidia are increasing nervous.

This was a large taxable of treatment during AMD's league telephone with investors connected Feb. 3. Wall Street analysts asked AMD CEO Lisa Su respective questions astir the presumption of the OpenAI deal, and she calmed immoderate nerves by saying the start-up volition person the archetypal batch of the latest MI450 GPUs successful the 2nd fractional of 2026 arsenic planned.