AMD Stock Plunges 10% on $20 Billion Bond Issuance

On June 24, 2025, Advanced Micro Devices (AMD) saw a pre-market rise of 3.18%, reflecting a positive market sentiment towards the company's recent developments and strategic moves.

Advanced Micro Devices (AMD) has recently announced plans to issue approximately $20 billion in convertible bonds, which has sparked significant market reaction. The announcement led to a near 10% drop in the company's stock price at the close of trading on Monday. Despite this short-term volatility, AMD's stock has shown impressive performance this year, rising over 40% since the beginning of the year, outperforming both the S&P 500 and the Nasdaq-100 indices.

The market's reaction to the issuance of convertible bonds is typically negative, as these bonds can be converted into shares in the future, potentially diluting the holdings of existing shareholders. AMD's convertible bonds are set to mature in 2030. While this has put short-term pressure on the stock, the company's strong fundamentals remain intact.

AMD's stock performance over the past year has been driven by the surging demand for high-performance AI servers, particularly those equipped with NVIDIA's latest Blackwell series chips. This demand has solidified AMD's position in the AI infrastructure market. The proceeds from the convertible bond issuance will be used for general corporate purposes, including funding growth and business expansion.

In addition to the bond issuance, AMD has plans to repurchase approximately $2 billion worth of its own shares. This move is aimed at mitigating market sell-off pressures and supporting the stock price. Despite the recent dip, AMD remains one of the few companies capable of rapidly delivering high-performance AI servers.

Analysts on Wall Street generally agree that AMD's leadership in AI training and inference optimization infrastructure will benefit the company in the future. Raymond James analysts noted that 70% of AMD's revenue comes from AI server-related businesses and gave the stock a "buy" rating. Rosenblatt Securities also reiterated its "buy" rating and set a 12-month target price of $50 per share. Although the current stock price is $40.89, market confidence in AMD remains strong.

In May, AMD secured a significant AI server supply contract with a large data center in Saudi Arabia, further demonstrating its competitive edge in the international market. As global demand for AI computing power continues to rise, AMD's stock, after a period of volatility, is expected to return to an upward trajectory.

Driven by advancements in AI technology, AMD's future prospects are widely viewed favorably. With the release and widespread application of large AI models, the demand for AI computing power on the inference side is expected to grow exponentially. Many investors believe that AMD's stock could enter a long-term bull market as global enterprises increasingly adopt AI technologies.

While AMD shows strong growth potential in the AI server market, investors should remain cautious. Market volatility, policy changes, and the global economic environment could all impact the company's future performance. It is advisable for investors to maintain a moderate exposure to AI-driven stocks and adopt a strategy of buying on dips to manage potential market risks.

Overall, AMD's convertible bond issuance has drawn market attention, and while the stock has faced short-term pressure, the company's strong fundamentals suggest a positive long-term outlook. Continued investment and growing demand for AI infrastructure are expected to drive AMD's stock price higher.