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Why AMD Stock Fell Despite Bullish News

Markets punished investors who thought that Advanced Micro Devices (AMD) would fly higher. AMD
stock lost 6.8% in the last week and a quarter of its value in the last month. The company posted bullish
news with its desktop processor refresh.

What went wrong?

The AMD Ryzen 7950X CPU has 16-cores of processing and 32 threads. However, the chip runs hot at 95
degrees Celsius. The new normal of hot chips is confusing the consumer market. Enthusiasts spent years
tweaking systems to run at cooler temperatures to avoid throttling. AMD consumers will need to spend
more on parts to accommodate for more processing power on the new AM5 platform.

The latest AMD platform will cater to enthusiasts. This group is willing to pay a premium on high-end
motherboards, which costs around $1000. In addition, the new chipset requires updated DDR5 memory.

These prices are higher than DDR4. Last week, Micron (MU), a memory supplier, warned investors that
revenue and profits would disappoint.

The PC industry needs to work down a glut in DDR4 first. It could take a few quarters before consumers
buy DDR5 memory and AMD’s latest CPU and platform.

The industry launched premium products amid an economic slowdown. AMD stock is lower as investors
expect weak PC demand ahead.