Shares of chipmakers, neocloud operators, and key AI infrastructure firms fell as Democrats, who back AI regulations, won in both the House and Senate.
- AMD reported stronger-than-expected Q3 results and forecast Q4 sales above expectations, a contrast to Intel’s report last week.
- Apple said its profit margin will fall this quarter because of surging memory chip prices.
- Marvell agreed to buy Lumentum for $115 billion in stock.
Democratic victories in the midterms sent AI stocks into a tailspin on Wednesday, adding to pressure from mixed Big Tech earnings and growing concerns that record AI spending may not be sustainable.
Here’s a roundup of key earnings and non-earnings news from the ongoing week:
AI Stocks Selloff As Democrats Win Congress
Shares of chipmakers, neocloud operators and key AI infrastructure firms fell on Wednesday and extended their slide in overnight trading as Democrats, who support AI regulations, won in both the House and Senate.
The Invesco QQQ Trust Series 1 (QQQ) declined 0.7% in overnight trading ahead of Thursday, and iShares Semiconductor ETF (SOXX) fell 1.2%, with sharp declines in Micron (MU), CoreWeave (CRWV) and Marvell (MRVL).
On Wednesday, Arizona Rep. Yassamin Ansari called for a pause on advanced AI development until adequate regulations are in place, as well as a ban on artificial superintelligence.
AMD Revives Chip Sentiment After Intel Fiasco
AMD reported stronger-than-expected third-quarter results and forecast fourth-quarter sales above Wall Street estimates, and also said it expects sales to grow 80% in 2027, buoyed by demand for data center chips.
The report came after Intel’s tepid forecast last week, which pressured the company’s shares and the broader sector.
Notably, AMD forecast December-quarter sales above Intel’s outlook. If both companies meet those targets, AMD would outsell Intel for the first time in their history.
Apple Hit By Surging Memory Chip Prices
Apple, Inc. (AAPL) shares tumbled after it said gross profit margin will continue to fall due to surging memory chip prices, which it expects to keep rising well into next year.
The company forecast a gross margin of 45% to 46% in the crucial holiday quarter, down from 47.9% in the fourth quarter. The messaging shifted focus from an otherwise upbeat fiscal fourth-quarter report, the first under new CEO John Ternus, with total and iPhone sales beating analyst expectations.
Marvell-Lumentum All-Stock Deal
Marvell (MRVL) on Monday announced a $115 billion all-stock deal to acquire Lumentum (LITE).
The companies said the combination would create a leader in connectivity for artificial intelligence data centers by joining Marvell’s chips and electrical connections with Lumentum’s lasers and optical parts, which move data using light.
Meta Turns To Debt To Fund AI Infrastructure
Meta announced a $15-billion bond sale to help pay for its expanding AI infrastructure. With Oracle’s $20-billion bond and equity offering this week, Meta’s move adds to a broader trend of Big Tech raising debt to fund AI despite having billions of dollars in cash in the bank.
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