Despite announcing a major AI data center partnership with Core Scientific on Monday, reaching up to 2.5 gigawatts, shares of Advanced Micro Devices (AMD) fell roughly 7.1% in late trading on Tuesday, dragged down by weakness across the broader chip sector.
Under the agreement, AMD will secure over 500 megawatts of U.S. data center capacity from Core Scientific, with deliveries expected to begin in 2027. The company also retains the right to expand the scope to 2.5 gigawatts. The initial capacity involves 15-year leases across five facilities located in Texas, Oklahoma, Alabama, and Georgia. AMD will directly lease approximately 380 megawatts, while the remaining 152 megawatts will be used by an unnamed cloud service provider, with AMD providing a credit guarantee.
This transaction marks a critical step in Core Scientific’s full transition from Bitcoin mining to AI infrastructure, following its shareholders’ rejection of a $9 billion acquisition offer from CoreWeave. Core Scientific expects the initial contract to generate over $14 billion in base revenue, with total contract revenue exceeding $24 billion. In return, AMD has obtained warrants to purchase up to 30 million shares of Core Scientific stock at an exercise price of $23.47 per share, which will vest in installments based on capacity deployment progress.
The decline in AMD’s stock price is more reflective of a broader "bleeding" effect within the AI hardware sector. Influenced by multiple factors—including Michael Burry’s short position on the semiconductor sector, growing market skepticism about AI financing models, and heightened risk aversion ahead of the Federal Reserve meeting—the Philadelphia Semiconductor Index fell 2.23% on Monday, with AMD closing down 5.17%. As funds clearly flow into software and application layers, investors are questioning the sustainability of large-scale capital expenditures, putting significant pressure on pure hardware concept stocks.
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