On Wednesday, Advanced Micro Devices (AMD) revealed a new initiative to repurchase $6 billion in stock, aligning itself with several other semiconductor companies aiming to decrease their outstanding shares. This move comes amid signs that the AI-driven market surge, which has significantly benefited tech stocks, may be losing momentum.
Following the announcement, shares of AMD, based in Santa Clara, California, saw an increase of up to 6.4%. However, the company’s stock has decreased by over 6% since the start of the year, contrasting with a minor drop of less than 1% in the Philadelphia Semiconductor Index.
The new buyback plan raises AMD’s total repurchase authorization to approximately $10 billion. This announcement closely follows AMD’s partnership with Humain, in which the two companies established a $10 billion collaboration, reflective of the trend among U.S. tech firms forming AI partnerships in the Middle East.
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Despite the broader chip sector facing challenges such as anxiety over AI-related expenditures and the ramifications of a global trade war, AMD has notably lagged behind its competitors, raising concerns about its position in the AI domain.
The company has been considered a serious contender to Nvidia, the leader in AI technology, yet it now grapples with significant pressures from custom processors and retains an uphill battle against the stronger market position of its larger rival.
Last year, AMD experienced an 18% decrease in shares, while Nvidia’s stock surged by over 170%. Custom AI chip manufacturer Broadcom saw its shares double in value this year, and the Philadelphia Semiconductor Index reported growth close to 20%.
“Our expanded share repurchase program reflects the Board’s confidence in AMD’s strategic direction, growth prospects, and ability to consistently generate strong free cash flow,” stated AMD Chief Executive Lisa Su.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AMD | ADVANCED MICRO DEVICES INC. | 117.72 | +5.26 | +4.68% |
| NVDA | NVIDIA CORP. | 135.34 | +5.41 | +4.16% |
| AVGO | BROADCOM INC. | 232.12 | -0.30 | -0.13% |
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Nonetheless, AMD’s free cash flow saw a significant decline of over 33%, totaling $727 million for the three months ended in March. As of March 29, the company reported cash and cash equivalents at $6.05 billion, while its current liabilities reached $7.70 billion.
Other notable semiconductor companies have also announced stock repurchase plans; Broadcom unveiled a $10 billion buyback in April, and Qualcomm revealed a $15 billion stock buyback in November.
