Advanced Micro Devices stock is plummeting today. Here’s what you need to know:

stock advanced micro devices (AMD -8.91%) The chipmaker is trading lower today after releasing disappointing results and guidance in its first-quarter earnings report. As of 2:44 PM ET, the stock was down 7.3% after falling as much as 10% in early trading.

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Is AMD the problem?

AMD essentially matched estimates in its first-quarter earnings report. But investors seemed to want a more optimistic outlook for AI chips. Executives said they expected to sell $4 billion worth of artificial intelligence (AI) chips this year, but that still falls well short of the AI ​​leader. nvidia.

AMD, meanwhile, is still struggling from a cyclical slowdown in its semiconductor division, with revenue up just 2% to $5.47 billion and adjusted earnings per share improving to $0.62 from $0.60, a cent ahead of estimates.

AMD saw strong growth in its data center and PC/client segments, while sales in its gaming and embedded segments, including automotive, consumer electronics, and infrastructure, declined sharply.

Second quarter sales were $5.7 billion, up 4% from the first quarter and 6% from the same period last year. This forecast was better than the $5.32 billion consensus, but shows that AMD is still waiting to experience significant tailwinds from AI.

Why AMD stock was sold off

AMD stock’s decline appears to have had more to do with its early execution on AI expectations than any major issues with the earnings report. The stock is still more than double what it was at the start of 2023, but it has now given back most of this year’s gains. Considering the latest results and guidance, this seems fair.

AMD still has a lot of potential in the AI ​​boom, as growth in data center revenue reflects, but investors will have to be patient as its broader business is feeling the impact of an early correction in its gaming and embedded segments.