AMD Plummets 7.3% Amid AI Chip Rivalry: Is This a Buying Opportunity or a Warning Sign?

Summary
• AMD’s stock nosedives 7.28% to $199.39, erasing $15.66 from its value in under 4.5 hours
• Meta’s rumored shift to Google AI chips triggers sector-wide panic, with NVDA down 4.06%
• Options chain sees 20 contracts traded, with AMD20251205P190 (put) leading volume at 6,817 contracts

Advanced Micro Devices faces a dramatic intraday selloff as whispers of Meta’s AI chip pivot to Google ignite sector-wide jitters. The stock trades at $199.39, down from a morning high of $203.30, with the 52-week low of $76.48 now within 60% of current levels. The move coincides with a surge in put options activity, signaling heightened bearish sentiment. Investors are now parsing whether this is a short-term correction or a structural shift in AI chip demand.

Meta's AI Chip Shift Sparks AMD Sell-Off
The selloff stems from reports that Meta is evaluating Google’s AI chips for its data centers, directly challenging AMD’s dominance in the AI infrastructure market. This news, amplified by sector-wide volatility, triggered a flight to safety in put options and a sharp decline in AMD’s price. The stock’s 7.28% drop reflects immediate concerns over reduced demand for AMD’s Instinct GPUs in Meta’s next-gen AI deployments. Additionally, the broader semiconductor sector reacted, with NVDA down 4.06% as investors reassessed AI chip competition.

Semiconductor Sector Volatile as NVDA Also Falls 4.1%
The semiconductor sector mirrored AMD’s decline, with NVIDIA (NVDA) down 4.06% as AI chip rivalry intensifies. While AMD’s drop was more pronounced, the sector-wide move underscores investor anxiety over market share shifts. Intel’s recent acquisition of SambaNova and TSMC’s record profits highlight the competitive landscape, but AMD’s direct exposure to Meta’s potential pivot makes its selloff more acute.

Options Playbook: Puts and Calls for a Volatile AMD
• RSI: 36.91 (oversold)
• MACD: -2.28 (bearish), Signal Line: 4.44
• Bollinger Bands: $205.39 (lower band), $277.11 (upper band)
• 200D MA: $148.99 (far below current price)

AMD’s technicals suggest a short-term oversold condition, but the 52-week low looms as a critical support. The 200-day MA at $148.99 is a distant floor, while the Bollinger Bands indicate a potential rebound toward $205.39. For aggressive traders, the AMD20251205P190 put and AMD20251205C195 call offer high leverage and liquidity. The put’s 45.15% leverage ratio and 60.09% IV make it a top bearish play, while the call’s 19.10% leverage and 61.02% IV balance risk and reward. A 5% downside scenario (to $189.42) would yield a 228.68% return on the put, while the call’s -53.05% loss underscores its bearish exposure. For a balanced approach, consider a short-term straddle near $195, where the 200D MA and RSI divergence could trigger a bounce.

Backtest Advanced Micro Devices Stock Performance
Below is the interactive event-study dashboard. It summarises how AMD’s share price behaves after every ≥ 7 % intraday plunge (2022-01-01 to 2025-11-25, 39 events).Key take-aways (high-level):1. Frequency & window • 39 qualifying sessions over the sample. • Analysis window: 30 trading days post-event (default of the engine; can be customised on request).2. Short-term reversion • Average close-to-close return after 5 trading days: +3.21 % (benchmark +0.57 %). • Win-rate rises to 68 % by day-4 and 65 % by day-5, showing a quick mean-reversion pattern.3. Medium horizon (1-month) • Cumulative return by 30 days: +6.49 % vs benchmark +3.70 %. • However statistical significance is weak beyond day-5; the edge tapers off.4. Trading implication • A 3-5 day tactical long after a ≥7 % plunge produced the strongest risk-adjusted edge historically. • Beyond a week the excess return becomes modest and less consistent.Feel free to drill into the dashboard above for full day-by-day metrics and individual event traces.

AMD at Crossroads: Short-Term Volatility vs. Long-Term AI Growth
AMD’s 7.28% drop reflects immediate fears of AI market share erosion but overlooks its long-term AI infrastructure bets, including the Helios platform and OpenAI partnership. The sector’s broader decline, with NVDA down 4.06%, highlights systemic risks in AI chip competition. Investors should monitor the $205.39 support level and AMD’s 52-week low for potential entry points. For now, the AMD20251205P190 put offers a high-leverage bearish hedge, while a rebound above $203.30 could reignite bullish momentum. Watch for Meta’s official AI chip strategy and AMD’s Q4 guidance to determine the next move.