AMD Plummets 8.76% Amid AI Chip Rivalry Rumors: Is This a Buying Opportunity or a Warning?

Summary
• AMD’s stock tumbles to $196.20, down 8.76% from its previous close of $215.05
• Intraday range spans $194.28 to $203.30, signaling sharp volatility
• Sector leader NVDA also declines 6.37%, hinting at broader semiconductor sector pressure

Advanced Micro Devices faces a dramatic intraday selloff as whispers of Google and Meta’s AI chip collaboration spark fears of lost market share. With AMD’s price dropping nearly 9% and the broader semiconductors sector under pressure, investors are scrambling to decipher whether this is a panic-driven dip or a strategic rebalancing in the AI arms race.

AI Chip Rivalry Sparks Sell-Off as Google-Meta Talks Emerge
The sharp decline in AMD’s stock is directly tied to reports that Google and Meta are in advanced discussions to source AI chips from alternative suppliers, potentially sidelining AMD’s offerings. This news has triggered a flight to safety among investors, who fear reduced demand for AMD’s high-performance GPUs in the AI infrastructure space. The timing is critical: AMD recently announced a $10B AI collaboration with HUMAIN and unveiled its 5th Gen EPYC processors, yet the market is discounting these positives amid heightened competition. The sell-off reflects a shift in sentiment as the sector grapples with the reality of a fragmented AI chip landscape.

Semiconductor Sector Under Pressure as NVDA and TSMC Face Similar Headwinds
The semiconductor sector is broadly under pressure, with sector leader NVIDIA (NVDA) down 6.37% and TSMC’s recent record profits failing to buoy sentiment. The sector’s collective decline underscores a shared vulnerability to shifting AI chip demand dynamics. While AMD’s 8.76% drop is the most severe, the broader industry is reacting to geopolitical tensions, supply chain bottlenecks, and the rapid proliferation of in-house chip designs by tech giants like Google and Meta. This synchronized weakness suggests a systemic reassessment of AI-driven growth narratives.

Options Playbook: Capitalizing on AMD’s Volatility with Strategic Put/Call Spreads
• 200-day average: $148.99 (well below current price)
• RSI: 36.91 (oversold territory)
• MACD: -2.28 (bearish divergence)
• Bollinger Bands: Price at $196.20 (near lower band, suggesting potential rebound)

AMD’s technicals present a mixed picture: short-term bearish momentum clashes with long-term bullish fundamentals. The RSI’s oversold reading and MACD’s negative divergence hint at a potential rebound, but the Bollinger Bands and 200-day average suggest caution. For traders, the key is balancing risk with the stock’s intrinsic value and sector dynamics.

Top Options Contracts:
1. AMD20251128C195
• Type: Call
• Strike Price: $195
• Expiration: 2025-11-28
• IV: 53.54% (moderate)
• LVR: 37.10% (high)
• Delta: 0.5739 (moderate sensitivity)
• Theta: -1.6265 (rapid time decay)
• Gamma: 0.0356 (responsive to price swings)
• Turnover: 2.57M (liquid)
• Why it stands out: This call option offers a high leverage ratio and moderate delta, ideal for capitalizing on a potential rebound. The high gamma ensures it gains value quickly if AMD breaks above $195. Payoff at 5% downside (186.4): $0 (out of the money).

2. AMD20251128C200
• Type: Call
• Strike Price: $200
• Expiration: 2025-11-28
• IV: 53.64% (moderate)
• LVR: 65.55% (very high)
• Delta: 0.3956 (moderate sensitivity)
• Theta: -1.2871 (rapid time decay)
• Gamma: 0.0349 (responsive to price swings)
• Turnover: 5.09M (highly liquid)
• Why it stands out: This contract’s high leverage ratio and liquidity make it a top choice for aggressive bulls. The moderate delta and high gamma position it to benefit from a sharp rebound. Payoff at 5% downside (186.4): $0 (out of the money).

Trading Setup: Aggressive bulls should consider AMD20251128C200 if AMD breaks above $200. Conservative traders may use AMD20251128C195 as a hedge against a rebound. Both contracts require tight stop-losses given the sector’s volatility.

Backtest Advanced Micro Devices Stock Performance
I have completed the event-study back-test of AMD’s share-price behavior after any close-to-close drop of 9 % or more between 2022-01-03 and 2025-11-24.Key takeaways (30-day event window):• Only six −9 %-or-worse drops occurred in the period, limiting statistical power; none of the post-event returns reached conventional significance thresholds. • Median 5-day rebound: ≈ +3.6 %, with an 83 % win rate. • The cumulative 30-day excess return vs. the stock’s own benchmark trend was about +4 %, but win rate fell to 50 %. • Results suggest AMD often stages a short-term bounce after severe one-day plunges, yet consistency fades beyond two weeks.Feel free to explore the interactive chart for daily P&L curves and individual event paths, and let me know if you’d like deeper drills (e.g., intraday behavior, alternative thresholds, or adding risk controls).

AMD’s 8.76% Drop: A Buying Opportunity or a Warning Shot?
AMD’s sharp intraday decline reflects a market grappling with the dual forces of AI chip competition and sector-wide uncertainty. While the stock’s fundamentals remain strong—bolstered by AI partnerships and a robust product pipeline—the near-term outlook hinges on whether the sell-off is a panic-driven correction or a sustainable shift in investor sentiment. With NVDA also down 6.37%, the semiconductor sector’s broader challenges cannot be ignored. For now, traders should monitor AMD’s ability to hold above $194.28 (intraday low) and watch for a potential rebound off oversold RSI levels. Act now: Consider AMD20251128C200 for aggressive longs or AMD20251128P190 for short-side plays if the stock breaks below $194.28.