AMD Slips to 5th in WSB Rankings as Shares Plunge 7.82% Amid Short-Seller Scrutiny

Advanced Micro Devices (AMD) has dropped to the 5th position in the latest WSB rankings, a decrease of one place from the previous day.
AMD's shares fell by 7.82%.

Currently, companies like Super Micro Computer Inc., Lumen Technologies, and Symbotic Inc. are facing significant scrutiny from short-selling firms. Analysts suggest that unlike leading AI stocks, shares of companies such as AMD are more volatile and are prone to attacks from short sellers.
Although the AI craze has resulted in substantial stock increases, it appears that not every company can withstand the test of time. Following a surge in AI stocks, some firms are now being shorted due to doubts about their valuations.

Last week, AMD’s market capitalization decreased from approximately $36 billion to around $26 billion, primarily due to a report by Hindenburg Research. This report raised concerns over "apparent accounting issues" and led to a crisis in corporate governance. The downgrade in AMD’s valuation came just a day after the report’s release.

The instability of stocks like AMD, compounded by their rapid rise, makes them susceptible to sharp declines when short-sellers raise allegations. Following Hindenburg's report, AMD announced it needed additional time to assess its financial reporting controls.

Historically, such volatile market reactions have been observed when new technologies generate excitement, from the advent of radio to the rise of the internet. Market dynamics like these reflect the ongoing exploration of AI's potential benefits. According to market experts, this is a crucial period for evaluating which AI-related companies will have sustainable growth.

Despite AMD's challenges, the CEO of Super Micro Computer, Charles Liang, expressed confidence in the company’s financial health and internal team. In a letter to clients, Liang stated there were no anticipated major adjustments to earnings for the fourth quarter or the fiscal year 2024.

As the market continues to digest these developments, stakeholders remain cautious. With historical precedents of market corrections following technological surges, investors are meticulously evaluating the long-term viability of AI stocks.