Intel and AMD Drop 3% as Rotation Out of AI Chip Stocks Continues; NVIDIA Holds Steady
Investors are bailing on AI chip stocks, but not all of them equally, and the gap between winners and losers reveals something important about how Wall Street is rethinking the cost of building out artificial intelligence infrastructure.
A rotation out of AI-linked chip stocks isn’t letting up, and two of the biggest names in processors are falling again. Intel (NASDAQ:INTC | INTC Price Prediction) stock is down 3% to $92.60 in morning trading. Meanwhile, Advanced Micro Devices (NASDAQ:AMD) stock is down 3% to $544.74, matching the decline in Intel shares.
Chip stocks are falling harder than the rest of large-cap tech. The iShares Semiconductor ETF (NASDAQ:SOXX) is down 2%, a smaller drop than Intel and AMD shares. By comparison, the Invesco QQQ Trust (NASDAQ:QQQ) is down 0.9%, a far softer slide than the chip fund.
NVIDIA (NASDAQ:NVDA) is another AI chip designer and the leader for the group. Its Blackwell Ultra systems and the newly ramping Vera Rubin platform power a Data Center business that sells to many of the same cloud providers Intel and AMD serve. NVIDIA shares are up 0.4% to $218.10, so not every chip stock is down today.
AI Financing Doubts Fuel the Selloff
The decline extends a rotation out of AI-linked chip stocks as investors question how AI infrastructure spending gets financed. Server processors from Intel and AMD feed that same expansion, which puts both stocks near the center of the trade.
Heading into the decline, Intel has improving results. Intel’s latest quarterly report posted what CEO Lip-Bu Tan called “our strongest revenue growth in more than fifteen years.” That same report showed its foundry business posting a large operating loss, a reminder of how costly its manufacturing push remains.
Data center chips anchor Intel’s AI business, with Xeon server processors handling cloud, enterprise and AI infrastructure workloads. Beyond servers, Intel has also demonstrated rack-scale AI systems with SambaNova and Foxconn for inference and agentic AI tasks. Its Client Computing and Physical AI Group adds processors for PCs, edge AI and robotics.
Intel’s Foundry Push Sets It Apart
Contract manufacturing is what separates Intel from its biggest rivals. Intel designs chips and is building a contract manufacturing business that requires heavy spending, grounded by process technologies such as Intel 3 and Intel 18A. Rivals AMD and NVIDIA design chips and outsource production, which leaves the cost of building factories to their manufacturing partners.
Spending plans at Intel reflect that commitment. The company is increasing investment in equipment, clean room space and substrates, and it’s expanding capacity for Xeon processors built on Intel 3. Washington backs that effort too, with Intel receiving U.S. CHIPS Act funding that supports its domestic production.
AMD built its AI franchise on an outsourced production model. Its Data Center lineup includes EPYC server processors, Instinct accelerators and Helios rack-scale systems, and that division now generates the majority of AMD revenue. Anthropic plans to deploy MI450 Series GPUs in Helios racks, while other large AI customers are scaling Instinct deployments.
Beyond the data center, Ryzen processors lifted AMD client sales, and embedded demand strengthened across several end markets. On the gaming side, AMD’s business shrank over the same stretch, leaving the company more dependent on AI and server demand.
Weighing Intel’s Bull and Bear Cases
Intel’s revenue recovery drives the optimistic view, with the company reporting this result: Data center and foundry sales both grew in the latest quarter, while client computing also expanded. Intel’s gross margin improved sharply from a year earlier as well, giving the turnaround a stronger financial base.
Foundry spending is the main worry for Intel. Its foundry unit is still running a large operating loss.
Strong AI growth stories at Intel and AMD sit alongside real near-term pressure from the rotation. On balance, Intel brings a recovering business with heavy capital needs, while AMD offers a lighter production model tied closely to AI accelerator demand. Shareholders of these chip stocks, especially INTC, should consider keeping their position sizes modest until the foundry question at Intel settles.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.With a master’s degree in education, David has taught at the elementary, high school, and college levels. That teaching background shapes his writing style: clear, educational, and practical. David has also built a loyal social-media audience by providing trustworthy financial content on YouTube, X/Twitter, and StockTwits.
