According to Woofun AI, Advanced Micro Devices (AMD.US) is mired in a bear market triggered by a broad selloff across the artificial intelligence sector, with its shares closing at $504 on Friday, a steep 23.58% retreat from their all-time high.
This decline has directly driven the company's market capitalization down from a peak of $1.06 trillion in October to $824 billion, wiping out more than $236 billion.
Ahead of its upcoming quarterly earnings report, the market's focus is no longer confined to the financial figures alone, but has shifted toward a deeper examination of the company's business model, particularly whether its controversial "circular investment" strategy can continue to win capital market recognition in the current high-valuation environment.
This model, known as "circular investment," in which chipmakers inject capital into large technology companies in exchange for commitments to purchase their hardware, has become a core growth engine adopted by both Advanced Micro Devices (AMD.US) and NVIDIA (NVDA.US).
The most notable recent case is Advanced Micro Devices (AMD.US) investing $1 billion in Meta (META.US) (formerly Facebook), in exchange for which Meta (META.US) is expected to use part of the funds to purchase Advanced Micro Devices (AMD.US) CPUs, GPUs, and networking equipment, while Meta (META.US) itself is already one of the largest buyers of Advanced Micro Devices (AMD.US) products.
In addition, Advanced Micro Devices (AMD.US) has pledged to invest $5 billion in Anthropic, the world's largest AI research organization, which is currently using Advanced Micro Devices (AMD.US) solutions to train its AI models.
Data compiled by Woofun AI shows that while such deals can lock in long-term orders, investors remain skeptical about the financial transparency and actual profitability of these related-party transactions, and with Intel (INTC.US) suffering its worst single-day performance in history on disappointing earnings and NVIDIA (NVDA.US) shares falling by double digits from their highs, the entire GPU industry is facing a severe crisis of confidence.
Against this backdrop, analysts expect Advanced Micro Devices (AMD.US) to report September-quarter revenue of $13 billion, up 41% year over year, with earnings per share rising from $1.20 a year earlier to $1.94, growth driven mainly by a surge in AI-related GPU and CPU businesses.
However, looking at the past performance of companies such as Micron Technology (MU.US), SanDisk (SNDK.US), and Samsung Electronics, most AI companies actually saw their share prices fall after releasing earnings, reflecting the market's sensitivity to high expectations and persistent concerns about an AI bubble.
From the derivatives market and technical perspective, downside pressure remains significant.
The options market's put/call open interest ratio stands at just 1.03, indicating that put options outnumber calls, with most put strikes clustered around $490, only about 3% below the current share price, suggesting a broad expectation that the stock will move lower.
Technical charts show that Advanced Micro Devices (AMD.US) shares have drifted down from an October high of $660 to the current $504, briefly rebounding to touch $577 last week before falling back again.
The stock has now broken below the key 23.6% Fibonacci retracement support level and sits beneath its 50-day moving average, while the "SuperTrend" indicator has also turned red.
Without a strong fundamental reversal signal, the share price is highly likely to continue probing down to the 50% retracement support at $421, which would mean a further decline of 16.25% from the current price.
This earnings report from Advanced Micro Devices (AMD.US) is not only a test of its AI strategy execution but also a reassessment of the valuation logic for the entire chip industry.
With the circular investment model raising both regulatory and financial questions, even if revenue figures meet expectations, the market may choose to sell off on concerns about long-term sustainability.
This is another test of confidence for the semiconductor sector following Intel's (INTC.US) earnings blowup, and investors need to be wary of the divergence between strong short-term data and long-term valuation reconstruction.
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