Lisa Su's Upbeat Comments Can't Stop AMD Stock from Falling

Shares of chipmaker Advanced Micro Devices (AMD) fell on Tuesday, even after CEO Lisa Su said that demand for the company's products is increasing. The stock initially rose nearly 1% but then dropped as much as 4.4% before ultimately closing the day with a 3.04% loss. The move showed that investors were cautious and appeared unconvinced by the upbeat comments, despite AMD's strong position in the AI chip market.Claim 70% Off TipRanks PremiumUnlock hedge fund-level data and powerful investing tools for smarter, sharper decisions Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential The decline followed announcements Su made at the CES trade show, where she introduced a new chip designed for corporate data centers and highlighted the performance of AMD's flagship MI455X processor. Indeed, AMD has become Nvidia's main competitor (NVDA) in AI accelerators, which are the chips used to train and run artificial intelligence models. However, after AMD shares jumped 77% last year, about twice Nvidia's gain, investor expectations have risen, while worries about a possible AI spending bubble have also increased. Unsurprisingly, when speaking to Bloomberg Television on Tuesday, Su pushed back on the idea that AI demand is overhyped. She explained that AI is already being used in everyday applications, not just discussed in investment circles. In addition, to keep up with demand, Su said computing power will need to increase by about 100 times over the next four to five years. Therefore, she believes that the industry is still in the early stages of unlocking AI's full potential. Is AMD a Buy, Sell, or Hold? Turning to Wall Street, analysts have a Strong Buy consensus rating on AMD stock based on 27 Buys, nine Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMD price target of $282.81 per share implies 32% upside potential.