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AMD falls as dour forecast shows cracks in AI trade

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Shares of Advanced Micro Devices slid after the chipmaker issued a cautious quarterly sales outlook, reviving investor concerns about its ability to challenge AI leader Nvidia. AMD forecast first-quarter revenue of about $9.8 billion, slightly above expectations but down from the prior quarter, signaling uneven momentum in its AI-driven growth.

The reaction came amid broader market anxiety over artificial intelligence spending, as investors question whether massive outlays are translating into near-term productivity gains. While AMD benefited from a late boost in China-bound AI chip sales, analysts noted that without those deliveries its data center results would have fallen short.

AMD executives said demand for next-generation AI servers should accelerate in the second half of the year, including shipments to OpenAI. Still, the muted outlook contrasted sharply with upbeat signals from AI server makers, highlighting growing scrutiny over which companies can turn AI demand into sustained earnings growth.

Is ASML nearing a growth ceiling or gearing up for another breakthrough?

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Shares of Dutch chip-equipment maker ASML have surged to record levels, reigniting debate among investors over whether the company is approaching its growth limits or entering a new phase of expansion fueled by artificial intelligence demand. The stock initially jumped after strong fourth-quarter results before reversing course, highlighting how stretched expectations around the company have become.

ASML has been one of the biggest beneficiaries of the AI boom, as its extreme ultraviolet lithography machines are essential for producing advanced chips used by companies such as TSMC and Nvidia. Shares are up sharply this month and trade at elevated valuation multiples, reflecting optimism about future growth but also raising concerns that much of the good news is already priced in.

The company’s order backlog stands at nearly 39 billion euros, yet each machine can take up to a year to build, prompting questions about capacity constraints. ASML management has said it does not expect to become a bottleneck for the semiconductor industry, even as customers plan major capacity expansions over the coming years.

Supporters argue that long-term demand from AI, data centers, and advanced manufacturing will continue to drive growth, while skeptics caution that high valuations leave little room for disappointment. The debate underscores ASML’s central role in the global chip supply chain and the fine balance between exceptional growth prospects and lofty investor expectations.

US software stocks slide as AI disruption fears intensify

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U.S. software stocks fell sharply on Thursday as disappointing outlooks from major players deepened investor concerns that traditional software providers are being overtaken by artificial intelligence-driven competitors. Weak sentiment was triggered after Germany-based SAP issued an underwhelming cloud outlook, while ServiceNow shares dropped despite forecasting stronger subscription revenue.

Investors are increasingly worried that advances in AI, including the rapid and low-cost generation of software code and applications, could undermine the subscription-based software-as-a-service business model. Several high-profile U.S. firms saw steep losses, including Salesforce, Adobe, and Datadog, as the sell-off spread across the sector.

The pressure was compounded by concerns over heavy AI spending. Microsoft reported record AI investment alongside slower cloud growth, sending its shares sharply lower. Analysts said markets are pricing in a worst-case scenario in which AI fundamentally reshapes the software industry faster than incumbents can adapt.

Software stocks were among the biggest decliners on the Nasdaq, while chipmakers and memory firms continued to benefit from AI-driven demand, highlighting a widening divide between hardware and software winners in the AI race.