AMD and Applied Materials (AMAT) faced a volatile start to the week, caught in a tightening vice of geopolitical uncertainty and waning demand sentiment surrounding the artificial intelligence sector. The cascade of selling pressure highlights a growing market recalibration, moving from unfettered bullishness over AI to a more cautious assessment of the industry's near-term headwinds.
Applied Materials Slides on Geopolitical Fears
Applied Materials (AMAT) dropped 2.9% on Monday to $404.86, despite reporting a strong fiscal first-quarter earnings beat. The company posted earnings per share of $2.38, topping the $2.21 consensus estimate, while revenue came in at $7.01 billion above $6.88 billion expected. The decline was driven almost entirely by an escalation of US-China tensions around artificial intelligence. China ordered Meta to unwind its $2 billion acquisition of AI startup Manus, citing national security concerns. The White House responded by accusing China of stealing American AI technology on an “industrial scale” and warned of stricter enforcement. This rhetoric unsettles investors in semiconductor equipment companies like Applied Materials, which sits at the center of the US-China tech dispute. Separately, ongoing supply chain disruptions linked to the US-Israel-Iran conflict added further pressure, with higher raw material costs and production delay risks weighing on tech hardware names. Despite the drop, AMAT remains up 50.2% year-to-date and has a consensus analyst rating of Moderate Buy with 27 Buy ratings.
AMD Drops on OpenAI Growth Concerns
AMD experienced an even sharper selloff, falling as much as 4.8% on Tuesday before closing down around 3.72%. The catalyst was a Wall Street Journal report revealing that OpenAI missed its own internal revenue and user growth targets for 2025. Crucially, the AI giant failed to hit one billion weekly active users for ChatGPT. Revenue growth also slowed, with users reportedly migrating to competing AI products such as Anthropic’s Claude and Alphabet’s Gemini. Although OpenAI dismissed the report as “ridiculous,” investors reacted swiftly. Given that AMD has a supply agreement with OpenAI to provide data center components, fears immediately emerged over potential weaker chip demand. Analysts, however, questioned whether the selloff was justified, noting that rivals absorbing OpenAI’s lost users are also active chip buyers. AMD is still up over 50% year-to-date and over 248% in the past 12 months. The company is set to report Q1 2026 earnings on May 5, with expectations of $1.28 EPS and $9.87 billion in revenue.
