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AMD tumbles 8.8% as AI stocks turn volatile after a weeklong rally
AMD lost $84 billion in market value as volatility returned to artificial intelligence stocks, reversing part of a rally that began Nov. 6. Funds built to magnify AMD's daily moves may have lost more, and a Nasdaq-100 fund lost $12 per $1,000 held.
At Friday’s close: S&P 500 −0.40%, Nasdaq-100 −1.22%, Dow +0.10%
Quick Read
- AMD fell sharply on Friday as volatility returned to AI chip stocks after a rally that began Nov. 6.
- The technology sector fund lost ground while consumer staples and energy gained, so the selling centered on tech.
- Funds built to magnify AMD's daily moves may have lost more than the stock itself.
- Even after Friday, the Nasdaq-100 and the S&P 500 finished the week higher.
How far did AMD fall on Friday?
Advanced Micro Devices (Nasdaq: AMD) closed Friday at $534.05, down from $585.30 on Thursday. After the drop, the chipmaker was worth $870 billion in total.
Why it matters: Trading was heavy. About $24 billion of AMD stock changed hands during the session. The shares now sit 17.8% below their 52-week high of $649.42.
By the numbers: The pressure reached broad funds too. The Nasdaq-100, an index of the largest Nasdaq-listed companies and mostly tech, slid 1.2%. A Nasdaq-100 fund lost $12 for every $1,000 held. The S&P 500 fell 0.4% to 7,561.67. The Dow edged up 0.1%.
Why did AI chip stocks swing so much?
The selling reversed part of a rally in AI stocks that began Nov. 6. Even after Friday, the Nasdaq-100 rose 3.5% for the week. The S&P 500 gained 2.5% over the same stretch.
Friday's losses were concentrated in tech. The technology sector fund (XLK) slid 2.0%. Steadier groups moved the other way: consumer staples gained 1.4% and energy rose 0.9%.
Volatility describes how big and how fast price swings are. After a quick run higher, AI chip stocks can give back ground just as quickly. Friday showed that in AMD.
Bond yields climbed as well. The 10-year Treasury yield rose 5 basis points to 5.15%. Higher yields can weigh on fast-growing tech companies, whose value rests heavily on profits expected years ahead.
What happened to leveraged AMD funds?
Several exchange-traded funds, which trade like a stock, are built to magnify AMD's daily move. A fund like that amplifies a rally and a drop alike.
Those funds rode the AI chip rally higher. On a day like Friday, they may have lost more than AMD shares did.
Such funds generally reset their target each day. Over several sessions, their returns can drift away from a simple multiple of AMD's move, in either direction.
What comes next for AMD and AI stocks?
What’s next: October retail sales arrive on Nov. 17 at 8:30 a.m. ET. October industrial production follows at 9:15 a.m. ET.
The Fed announces its next interest-rate decision on Dec. 9 at 2 p.m. ET. Rates matter for tech stocks because yields shape how much future profits are worth today.
The question is whether Friday's swing was a pause in the AI rally or the start of a broader pullback. How chip stocks trade in the coming sessions may show it.
For readers
What it could mean for you: If you own AMD shares directly, Friday's drop landed on you in full, with no other holdings to soften it. If you hold a fund built to magnify AMD's daily moves, the swing may have been larger still, on the way down as well as the way up. Broad index funds carry AMD only in proportion to its size, so their moves were smaller. If AI chip stocks keep swinging, AMD could keep moving far more than a diversified fund, in either direction.
Questions and answers
Why did AMD stock fall on Friday?
AMD dropped as volatility returned to AI chip stocks, reversing part of a rally that began Nov. 6. The broader technology sector fell too, so the selling reached beyond AMD.
What is a leveraged AMD ETF and how does it work?
It is a fund that trades like a stock and is built to magnify AMD's daily move. It amplifies gains on up days and losses on down days. It generally resets its target each day.
How did the AMD drop affect index funds?
An S&P 500 fund lost $4 per $1,000 held on Friday. A tech-heavy Nasdaq-100 fund lost more. The Dow edged higher.
The numbers
| Advanced Micro Devices (AMD) price | $534.05 |
|---|---|
| Advanced Micro Devices (AMD) change | −8.76% |
| Advanced Micro Devices (AMD) market value | $870 billion |
| Advanced Micro Devices (AMD) 52-week high | $649.42 |
| S&P 500 change | −0.40% |
| 10-year Treasury yield | 5.15% |
Friday’s close
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Not investment advice.