AI investment doubts are rising; AMD needs to provide strong guidance to avoid repeating Intel's mistakes.

Advanced Micro Devices is one of the best-performing chip stocks this year, but doubts about AI capital spending are mounting in the market. The company will report earnings Tuesday afternoon, and only by delivering strong results and optimistic guidance can AMD sustain its upward momentum. Neville Javeri, a portfolio manager at Allspring Global Investments who holds AMD shares, said: "To keep the rally going, it's not enough to just beat expectationsyou need to beat them substantially, along with fairly positive guidance. A merely mediocre earnings report won't be enough." Although Wall Street broadly expects AMD's results to be solid, investors today are quick to sell off at the first sign of a shortfall. Intel posted its worst single-day performance since 1982 last Friday, triggered by weaker-than-expected guidance. Before that, tech giants making heavy AI investmentsAlphabet, Meta, Amazon and othersalso saw their shares come under pressure, as massive capital expenditures continue to drain cash flow. Wall Street analysts expect AMD's third-quarter earnings to surge 92% and revenue to grow 41%, and they expect both metrics to continue rising in 2027. CEO Lisa Su said last month that the company anticipates chip demand will be "extremely high" over the coming years, with supply unable to keep up. Jim Worden, chief investment officer at Wealth Consulting Group, has sold his AMD position, citing environmental uncertainty combined with high valuations; but he continues to hold other chip names such as Nvidia, Broadcom and TSMC. He said: "Products like Muse could potentially propel AMD from steady growth into a hyper-growth phase, but I really can't feel comfortable with the current valuationthere are still too many questions."