Advanced Micro Devices (AMD) announced a $6 billion stock buyback plan, increasing its total repurchase authority to $10 billion, amid concerns over slowing AI-driven share growth. Despite a 6.4% stock rise following the announcement, AMD shares have fallen over 6% this year, underperforming the Philadelphia Semiconductor Index. The buyback coincides with a $10 billion collaboration with Humain. AMD faces tough competition in the AI market, especially from Nvidia, which has seen substantial gains. CEO Lisa Su expressed confidence in AMD’s growth prospects, although the company’s free cash flow recently declined by over 33%.
(Reuters) – Advanced Micro Devices revealed a new $6 billion stock repurchase plan on Wednesday, following a trend among chipmakers looking to decrease their float as AI-driven market gains show signs of deceleration.
Shares of the Santa Clara, California-based firm increased by as much as 6.4%. Despite this uptick, its shares have dropped over 6% this year, in contrast to a less than 1% decline for the benchmark Philadelphia Semiconductor Index.
This buyback expands its total repurchase authorization to about $10 billion, coming just one day after AMD announced a $10 billion collaboration with Humain, aligning with various U.S. tech firms that have entered AI partnerships in the Middle East.
While the semiconductor sector faces challenges from concerns about artificial intelligence-related spending and the effects of a global trade conflict, AMD has notably lagged behind its peers due to anxiety about its competitiveness in the AI landscape.
Recognized as a leading competitor to Nvidia’s AI dominance, AMD now encounters significant competition from custom processors and Nvidia’s stronghold in the industry.
AMD’s shares plunged 18% last year, whereas Nvidia’s shares surged over 170%. Additionally, custom AI chipmaker Broadcom’s shares doubled in value in 2024, while the Philadelphia Semiconductor Index increased by nearly 20%.
“Our enhanced share repurchase program signifies the Board’s confidence in AMD’s strategic trajectory, growth potential, and ability to reliably produce strong free cash flow,” stated AMD Chief Executive Lisa Su.
However, AMD’s free cash flow for the three months ending in March decreased by over 33% to $727 million. As of March 29, the company’s cash and cash equivalents totaled $6.05 billion, while current liabilities reached $7.70 billion.
Other major chipmakers engaging in stock repurchases include Broadcom, which announced a $10 billion buyback in April, and Qualcomm, which introduced a $15 billion stock repurchase plan in November.
(Reporting by Deborah Sophia and Arsheeya Bajwa in Bengaluru; Editing by Anil D’Silva and Shinjini Ganguli)