Advanced Micro Devices rally fades on Nvidia uncertainty

By Amara Osei

Advanced Micro Devices’ two-day market capitalization gain had eased to $103 billion by midday Tuesday after shares gave back most of their Tuesday advance. The stock had been up 6% at its high, briefly adding $148 billion, but remained up 0.7% at midday. Investors were still weighing whether the rotation would persist beyond the initial response to Nvidia.

What prompted the rotation?

MarketWatch reported that the trigger was news broken over the weekend: Nvidia CEO Jensen Huang admitted to an affair with an alleged Chinese foreign-intelligence asset. Nvidia’s board is probing that relationship.

David Wagner, a portfolio manager at Aptus Capital Advisors, told MarketWatch that Nvidia’s board probe gave investors reason to shift their positioning within the chip sector. He focused on AMD’s role in data-center accelerators, the advanced hardware components used for artificial-intelligence workloads.

“AMD is the most direct alternative in data-center accelerators,” Wagner said. Investors are “diversifying AI exposure away from a single dominant name,” he said, referring to Nvidia. For those investors, “AMD is the first stop,” Wagner added.

How much of this is real switching?

That distinction matters because a portfolio shift can occur long before customers change supplier relationships. Money can move out of Nvidia and into AMD because of uncertainty around one company, without AMD becoming a lasting replacement for Nvidia’s semiconductor supply.

Afsheen Afshar, founder of Pilot Wave Holdings, told MarketWatch he would be “careful about treating every dollar moving into AMD as simply a dollar moving out of Nvidia.” Afshar said heavy customer dependence on one supplier creates an incentive to reassess alternatives whenever disruption clouds that supplier’s position.

“When customers are this dependent on one supplier, any disruption around that supplier creates an incentive to reassess alternatives, even if those alternatives are not perfect substitutes,” Afshar said. He was referring to AMD as an alternative semiconductor supplier to Nvidia.

Afshar also separated a short-lived market benefit from durable market-share gains. AMD can benefit from “Nvidia-specific uncertainty,” he said, but “The first can happen quickly in the stock market. The second requires customers to make long-term architecture and procurement decisions around AMD,” he explained.

Afshar did not call AMD a perfect substitute or say that Nvidia’s disruption had already changed supplier choices. His test was prospective: whether dependence on one supplier creates enough incentive to reassess AMD before a durable architecture and procurement shift occurs.

What did Anthropic’s valuation signal?

Tuesday also brought a separate test for the AI-chip group, whose shares often swing on developments tied to Anthropic. Anthropic sought a target valuation of $1.3 trillion to $1.4 trillion, below what it had once reportedly targeted but above the lower levels investors had feared in recent weeks.

Anthropic based the target range on various implied diluted share counts. “The news comes as a positive surprise,” Wedbush analyst Matt Bryson told MarketWatch, because some investors had expected a valuation closer to $1 trillion.

The Anthropic valuation and Nvidia board probe left investors with two different AI-sector signals: a favorable surprise from a sought valuation and renewed uncertainty around a dominant chip supplier. For AMD, Wagner’s near-term thesis remained intact; Afshar’s longer test was whether customer architecture and procurement decisions would follow.

The market has already delivered the quick stock-market response Afshar described. The durable test comes later: whether customers make the long-term architecture and procurement choices required to turn Nvidia-specific uncertainty into lasting semiconductor market share for AMD.