The S&P 500 and Nasdaq Composite experienced declines for a second consecutive day, driven predominantly by disappointing earnings from Advanced Micro Devices (AMD), a major player in the semiconductor industry. In contrast, the Dow Jones Industrial Average managed to wrap up the day in positive territory, largely bolstered by strong performance from a prominent healthcare company.
After the close of trading on Tuesday, AMD reported that its fourth-quarter earnings soared by 40% year over year, reaching $1.53 per share, and revenues climbed 34% to $10.3 billion. These results surpassed Wall Street expectations, fueled primarily by a significant 39% surge in revenue from its data center segment. However, Wedbush analyst Matt Bryson cautioned that this growth largely stemmed from sales of MI308 chips to China, implying that future gains in AI-related silicon may be more muted.
Bryson indicated that while AMD’s outlook remains robust even without these one-time sales, the company’s struggle to “extract incremental value” from existing CPU shortages likely contributed to a decline in share prices following the earnings report. AMD’s stock plummeted by 17.3% on Wednesday, dragging down other semiconductor stocks, including Broadcom and Micron Technology, which fell by 3.8% and 9.6% respectively.
The downturn in the technology sector saw the Nasdaq closing down 1.5% to 22,904 and the S&P 500 slipping 0.5% to 6,882. In contrast, the Dow rose by 0.5% to 49,501, with Amgen emerging as a bright spot after its shares surged by 8.2% owing to favorable fourth-quarter results and optimistic forward guidance. William Blair analyst Matt Phipps noted that Amgen’s success highlights growth for key products such as Repatha and Tezspire, contributing positively to the Dow despite declines in other stocks like Goldman Sachs and Nvidia.
In other notable market movements, Brookfield Asset Management shares jumped by 4.9% post-earnings release, which exceeded expectations. The firm not only raised its dividend by 15% but also appointed Connor Teskey as its new CEO. Analysts at CFRA maintained a Buy rating for Brookfield, suggesting it is well-positioned to benefit from trends in AI infrastructure and renewable energy.
Additionally, Enphase Energy saw a remarkable spike, with its shares surging 38.6% after reporting strong fourth-quarter results and offering optimistic guidance for the first quarter. Analysts noted that demand in the U.S. hit its highest levels in over two years, driven in part by customers rushing to secure clean energy credits before they expired.
On the economic front, data released by ADP highlighted that the U.S. added 22,000 private payrolls in January, significantly falling short of the 45,000 economists had anticipated. Economists from Raymond James noted that the education and health services sectors were the strongest performers, while the professional and business services sector lagged. They cautioned that this data may signal a weaker jobs report for January, which is due for release next week.
