[BENGALURU] Advanced Micro Devices (AMD) on Wednesday (May 14) announced a new US$6 billion stock buyback plan, joining a string of chipmakers that are looking to reduce their float as the artificial intelligence (AI) trade that has powered their shares shows some signs of slowing.
Shares of the Santa Clara, California-based company rose as much as 6.4 per cent. Its shares have fallen more than 6 per cent so far this year, compared with a less than 1 per cent drop for the benchmark Philadelphia Semiconductor Index.
The buyback, which boosts its total repurchase authority to about US$10 billion, comes just a day after AMD announced a deal with Humain, saying it has formed a US$10 billion collaboration, following in the footsteps of a number of US technology firms that struck AI deals in the Middle East.
While the chip sector at large has been pressured by fears around AI-linked spending and the impact of a global trade war, AMD has still underperformed peers as concerns emerge around its competitiveness in the AI market.
AMD has been lauded as the most formidable competitor to AI front-runner Nvidia’s dominance, but the company now faces tough competition from custom processors and the larger rival’s industry stronghold.
AMD’s shares fell 18 per cent last year, while Nvidia shares rose above 170 per cent. Custom AI chipmaker Broadcom’s shares doubled in value in 2024 and the Philadelphia Semiconductor Index had risen close to 20 per cent.
“Our expanded share repurchase program reflects the Board’s confidence in AMD’s strategic direction, growth prospects, and ability to consistently generate strong free cash flow,” AMD chief executive Lisa Su said.
However, AMD’s free cash flow in the three months ended March fell more than 33 per cent to US$727 million. As at Mar 29, its cash and cash equivalents were US$6.05 billion while current liabilities stood at US$7.70 billion.
Among other major chipmakers repurchasing their stock, Broadcom announced a US$10 billion buyback in April, while smartphone chipmaker Qualcomm unveiled a US$15 billion stock buyback in November. REUTERS
