Most semiconductor stocks, which have been riding the artificial intelligence wave, are trading in the red after one of the industry’s biggest players, Advanced Micro Devices (NASDAQ: AMD), published disappointing results in the third quarter of 2024.

Investors reacted negatively to the lackluster report, with the stock plunging nearly 10% in 24 hours to trade at $151 at press time.

The correction came after AMD’s forecast warned that the company’s AI chip supply would likely remain constrained in the coming year, indicating it may struggle to meet demand. demand from large technology companies.

The bleak outlook was further compounded by the chipmaker’s revenue forecast of $7.5 billion, plus or minus $300 million, for the final quarter of the year, slightly below consensus forecasts. of 7.55 billion dollars.

It is interesting to note that the stock’s performance surprised some analysts, such as those at Morgan Stanley (NYSE: M.S.), who noted that the company’s returns were “substantially in line” with consensus expectations. In a note to investors, the banking giant said it was “somewhat surprised” by AMD’s returns.

On the other hand, a certain optimism persists with regard to ADM, according to experts at Bank of America (NYSE: BAC) reiterating a “Buy” rating with a price target of $180.

The recent drop in AMD’s stock price after releasing disappointing results has added uncertainty to the AI-driven stock boom. Like Nvidia, AMD is an important player in the sector, so its performance is interesting, betting on the AI ​​trend.

ChatGPT-4o verdict on the AI ​​boom

In this regard, Finbold consulted OpenAI’s ChatGPT-4o to determine whether AMD’s third-quarter results will have an impact on the broader AI landscape.

ChatGPT-4o began by laying out the factors that could determine the fate of the AI ​​boom, highlighting potential market saturation and fluctuations in demand. The tool warns that rapid growth in AI could lead to saturation and downside risk if companies overestimate future needs for AI chips and data centers.

Additionally, the AI ​​model highlighted that profitability could be reduced across the industry due to increased competition, particularly in the AI ​​hardware scene. AMD’s struggles, he suggests, indicate that only companies with the strongest technologies and market positions will sustain growth.

ChatGPT-4o also pointed out that high-growth sectors are likely to experience “hype cycles.” These cycles are characterized by initial enthusiasm, which inflates stock prices before economic realities drive a recalibration.

Even if major applications of AI remain strong, companies could face valuation adjustments as investors shift toward sustainable expectations.

The verdict on the fate of the AI ​​sector

Regarding the fate of the AI ​​boom, ChatGPT-4o said AMD’s results could indicate that the sector is in a realignment phase, likely indicating a slowdown but not stagnation.

The OpenAI app warned that short-term volatility, such as AMD’s decline, could dampen investor enthusiasm in the short term, even if the long-term potential of AI technologies remains intact.

Analysts take on the AI ​​bubble

On the other hand, some analysts and financial figures have mixed opinions about the chances of an AI bubble bursting. For example, SoftBank CEO Masayoshi Son rejected the AI ​​bubble narrative, noting that industry leader Nvidia remains undervalued.

Finally, Bret Taylor, President of OpenAI note that the current AI boom can be compared to the Internet bubble. However, he warned that AI could be in a speculative phase.

Taylor noted that the rapid growth of AI could be “justified”, suggesting that, as in the dot-com era, businesses valued at trillions of dollars could ultimately emerge from the enthusiasm generated by the potential of AI.