Advanced Micro Devices (AMD) has announced a new $6 billion stock buyback plan, signaling its intent to return value to shareholders amid signs of a slowdown in the artificial intelligence (AI) trade that previously boosted chipmaker stocks. This move increases AMD’s total repurchase authorization to approximately $10 billion. The announcement, made on Wednesday, triggered a surge in AMD shares by as much as 6.4%, although the stock remains down over 6% year-to-date, compared to a less than 1% decline in the Philadelphia Semiconductor Index.
The buyback news follows AMD’s $10 billion collaboration deal with Humain, marking its push into strategic AI partnerships, especially those tied to the Middle East. This aligns AMD with other U.S. tech giants that have been expanding AI alliances globally. Despite such efforts, AMD has been trailing behind its peers in performance, largely due to investor concerns about its ability to compete effectively in the increasingly crowded AI semiconductor space.
While AMD has been recognized as a key challenger to Nvidia’s dominance in AI chips, the emergence of custom processors and Nvidia’s firm grip on the sector have posed significant challenges. In comparison, AMD’s shares fell 18% in 2024, whereas Nvidia soared over 170%, and custom chipmaker Broadcom saw its shares double in value. The overall chip sector has faced pressure due to fears over AI spending slowdowns and ongoing global trade tensions.
Despite the mixed performance, AMD CEO Lisa Su stated that the expanded buyback reflects the board’s confidence in the company’s growth path and its capacity to generate strong free cash flow. However, recent figures show that AMD’s free cash flow dropped over 33% in the first quarter to $727 million, with $6.05 billion in cash and equivalents against $7.70 billion in current liabilities. Other major chipmakers such as Broadcom and Qualcomm have also embraced large buybacks, signaling a broader trend in the sector to boost investor confidence.