AMD (NASDAQ: AMD) shares took a hit on the first trading day of 2024. The semiconductor expert’s stock price closed 6% down, based on data from S&P Global Market Intelligence.
The drop resulted from ASML’s suspension of shipments of lithography machines to China’s semiconductor fabrication sector. The reason behind ASML’s decision was the pressure exerted by the U.S. government.
Adding to the turmoil, tech stocks stumbled after Barclays analyst Tim Long revised the firm’s rating on Apple stock from “neutral” to “underweight.” This move involved reducing the one-year price target on Apple from $161 to $160 per share, citing a less promising outlook for the iPhone line and potential waning of the company’s services business.
AMD’s Stock in the Aftermath of the Sell-Off
The significant pullback observed in AMD stock today underscores the looming valuation threats challenging the tech sector, especially growth-reliant chip stocks. Amid this turbulence, the ASML news far outweighs the impact of Barclays’ rating adjustment on Apple stock.
Geopolitical tensions between the U.S. and China are escalating, with the semiconductor industry emerging as a central battleground between the two global superpowers. As the U.S. moves to curtail China’s access to high-performance AI chips, China signals its intent to reclaim control over Taiwan. This situation poses a crucial risk to AMD, which depends on chip-fabrication services from Taiwan Semiconductor Manufacturing.
Despite surging interest in AI technologies and a flourishing semiconductor landscape, AMD’s stock has surged to a significantly more growth-dependent valuation. Although the company’s recent business performance has been modest, its soaring stock price over the past year has been largely bolstered by optimism surrounding future AI prospects.
AMD PE Ratio (Forward 1y) data by 10 best stocks for investors to buy now, and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could yield substantial returns in the coming years.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Apple, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.