Why AMD stock is up 11% on November 6 after a chip rout

AMD stock rose 11% on Friday, November 6, closing at $449.04, up $44.64 on the day, after a two-day slide that took it well below its pre-earnings level. The Motley Fool's market report puts the move down to a rebound from Thursday's chip sell-off. AMD itself announced nothing new on Friday.

The gain only recovers part of the fall. Our report on November 5 had AMD down about 12% that morning, from a November 4 close of $488.78. The Fool's figures imply Thursday's close was $404.40, so Friday's close is still about 8% below Wednesday's.

Why the stock rebounded

The Fool says Thursday's drop followed fears that the Democratic midterm wins could bring tighter rules for data center builders, and that Friday's rally eased those worries. It also calls the rally a delayed reaction to AMD's results and says traders may have overreacted on Thursday. Those are the outlet's readings. It names no analyst or investor behind them.

The wider market moved the same way:

• Intel rose 7.7% and Nvidia 2.8%, per the Fool.
• The Nasdaq rose 1.09% and the S&P 500 0.34%.
• AMD traded about 45 million shares, roughly twice its three-month average of 22 million.

What AMD reported

The numbers behind the rally come from AMD's results release of November 3. Third-quarter revenue was $13.4 billion, up 45% from a year earlier. Data center revenue was $8.5 billion, up 97%. AMD guided fourth-quarter revenue to about $17 billion, plus or minus 3%. Our earnings article has the full figures.

What we don't know

No source we could read explains why AMD fell about three times as far as Nvidia on Thursday, or how much of Friday's gain is lasting. The Fool notes that AMD trades at a price-to-earnings ratio of about 98, well above its peers, which leaves the stock sensitive to news about AI spending and data center permits.

AMD has not announced a date for its fourth-quarter report.