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Advanced Micro Devices is dropping right before earnings (AMD)

Lisa Fu
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  • Advanced Micro Devices is dropping, becoming one of the worst performers of the S&P 500, hours before it's due to release earnings.
  • The semiconductor industry faces uncertainty with tech giants moving to develop chips in-house.
  • Watch Advanced Micro Devices trade in real time here

Advanced Micro Devices is down 3.22%, making it one of the worst performers in the S&P 500 Wednesday.

The drop follows a decline in the broader market, after the 10-year Treasury bond yield traded above 3%. The semiconductor company faces extra pressure as it's scheduled to report earnings after the market close. 

The semiconductor industry faces uncertainty, after Google reported an increase in CapEx, specifically in CPUs, Memory and Networking, on Monday. With tech giants like Apple and Facebook also putting effort into developing chips in-house, there's a possibility that the semiconductor industry will see a drop in demand. 

Earlier in the month, the Philadelphia Semiconductor Index fell more than 4.5% following disappointing earnings guidance from Taiwan Semiconductor. That stoked fears that the global smartphone market is slowing. 

Credit Suisse analyst John Pitzer anticipates AMD Q1 revenue and EPS will come in above estimates, driven by demand from crypto mining, PCs and servers. Predicting the momentum from crypto will die down going into the next quarter, he expects management to guide Q2 revenue at least inline with Street estimates. 

"While there are several moving pieces and still a large degree of uncertainty – the current level of GPU-mining demand is most likely unsustainable," he said.

Wall Street is expecting Advanced Micro Devices to report adjusted earnings of $0.09 a share on revenue of $1.6 billion, according to analysts surveyed by Bloomberg. 

Advanced Micro Devices is down 10.57% this year. 

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