Nvidia and AMD shares fall as new AI announcements fail to re-energize investors

By Britney Nguyen

The chip makers introduce hardware and software designs for future AI data centers, but the revenue potential is still far out, an analyst says

Nvidia shares fell again Monday.

Shares of Nvidia and Advanced Micro Devices fell for the fourth consecutive day Monday as investors looked past the companies' latest announcements around open-source artificial intelligence.

AMD's stock (AMD) dropped 2.3% following the company's introduction of a blueprint for its upcoming Helion chip rack at the Open Compute Project's annual global summit on Monday. The OCP is focused on sharing open-source designs and specifications to develop industrywide standards for companies building products involved in the AI ecosystem.

The rack will support agentic AI, AMD said, and the blueprint is open, meaning the company's ecosystem partners can further develop and adopt the hardware and software. With Helion, customers will determine how to power agentic AI workloads, either by using only central processing units, or a mix of those chips with graphics processing units, the company said.

AMD has benefited from surging demand for server CPUs so far this year as agentic AI, or systems that can carry out tasks with little to no human prompting, takes off. Inference, or the process of a model-making predictions based off what it has learned, has also driven the need for CPUs to run AI applications and services.

Meanwhile, Nvidia's stock (NVDA) declined 1.3% after the company shared open-standard designs, including for parts of its upcoming Vera Rubin AI platform, for future AI factories and networking offerings with partners including Meta Platforms (META), Cisco Systems (CSCO) and Alphabet's (GOOGL) (GOOG) Google

Although the announcements bode well for the industry, Bill Birmingham, the head of research at Rex Financial, noted that they are mostly focused on setting standards for now.

"There is still a way to go before these announcements turn into purchase orders," Birmingham told MarketWatch.

In his view, Nvidia, AMD and other chip stocks were being dragged down Monday by ongoing concerns about the sustainability of the AI trade and the financial position of OpenAI.

The Financial Times reported last week that the AI startup told investors it was approaching $50 billion in annualized revenue at the end of September, which was $20 billion less than what it had previously projected. However, the FT and Bloomberg both reported that the discrepancy was tied to differences between how the ChatGPT maker and its rival, Anthropic, determine annualized revenue.

Still, AMD and Nvidia both have partnerships to supply OpenAI with millions of GPUs and other AI infrastructure. Therefore, the exposure both companies have to OpenAI means any shortcomings there would have an impact on near-term estimates, Birmingham said in emailed comments.

Meanwhile, Micron Technology's stock (MU) fell 3.9% as the South China Morning Post reported that its Chinese rival ChangXin Memory Technologies (CN:688825) said it had made "key progress" on a technique that can improve memory density on a single chip.

Optical stocks were hit especially hard in Monday's action, with analysts attributing the moves in part to cautious commentary about AI spending.

Additionally, long-term U.S. Treasury yields are holding near historical highs, Birmingham said. Therefore investors are continuing "to reprice growth-heavy equity valuations in general," meaning they're taking a fresh look at the high stock multiples associated with companies that borrow money to help fuel their growth.

-Britney Nguyen

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10-12-26 1719ET