AMD signs a 2.5 gigawatt AI data center deal, stock price still drops 7.1%

Despite AMD announcing on Monday a collaboration agreement with Core Scientific for AI data centers of up to 2.5 gigawatts, AMD's stock price fell about 7.1% in late trading on Tuesday, dragged down by weakness across the chip sector.

Under the agreement, AMD will receive over 500 megawatts of data center capacity in the United States from Core Scientific, with deliveries expected to begin in 2027, and retains the right to scale up to 2.5 gigawatts. The initial capacity involves a 15-year lease for five facilities in Texas, Oklahoma, Alabama, and Georgia, with AMD directly leasing about 380 megawatts, while the remaining 152 megawatts will be used by an unnamed cloud service provider, for which AMD provides a credit guarantee.

This deal marks a key step for Core Scientific in its full transition from Bitcoin mining to AI infrastructure, after its shareholders previously rejected a $9 billion acquisition offer from CoreWeave. Core Scientific expects the initial contract to generate over $14 billion in base revenue, with total contract revenue exceeding $24 billion. AMD also received warrants for up to 30 million shares of Core Scientific stock, with an exercise price of $23.47 per share, vesting in stages based on capacity deployment progress.

The decline more reflects the overall "bleeding" effect in the AI hardware sector. Influenced by Michael Burry's short position on the semiconductor sector, market doubts about AI financing models, and heightened risk aversion ahead of the Federal Reserve meeting, the Philadelphia Semiconductor Index fell 2.23% on Monday, with AMD down 5.17%. As funds clearly flow into software and application layers, investors are questioning the sustainability of large-scale capital expenditures, putting significant pressure on pure hardware concept stocks