Why Are Qualcomm and AMD Stocks Crashing Despite Strong AI Growth?

AMD had just reported record revenue and a stronger-than-expected sales forecast. Qualcomm was preparing to start a major expansion into AI data centres. Yet both stocks fell sharply on November 5, 2026, as investors questioned how quickly the next wave of chip growth would turn into earnings.

The pressure came from different directions. Qualcomm’s smartphone business was shrinking while higher costs squeezed profitability. AMD’s AI business was growing rapidly, but its shares were caught in a wider retreat from companies that depend on continued data-centre expansion.

Understanding that difference matters. A weaker existing business and fears about future growth can both push a stock lower, but the evidence needed to improve their outlooks is different.

How sharply did Qualcomm and AMD shares fall?

Both stocks declined during the November 5 US trading session, with AMD falling more sharply than the broader semiconductor index.

Sources: S&P Global Market Intelligence data displayed by Stock Analysis, Reuters’ November 5 closing market report. The session ended at 4:00 pm US Eastern Time on November 5

The timing helps explain the difference between the companies. Qualcomm released its results after the market closed on November 4, so Thursday brought the first full trading session after that announcement. AMD reported on November 3 and initially gained in after-hours trading. Its subsequent decline cannot fairly be described as an immediate rejection of weak earnings.

Why did AI chip stocks sell off so heavily?

The shared concern was that building new AI data centres could become slower and more difficult. Chipmakers depend on those facilities being built, connected to electricity and equipped before customers can deploy large quantities of computing hardware.

The US midterm elections increased that concern. Candidates critical of data-centre expansion won in important development states, including Texas and Georgia. Their victories raised the possibility of construction pauses or tougher approval conditions, adding uncertainty to spending plans that chip suppliers depend on. For more details, read our analysis of the US stock market after the midterm elections.

There is a straightforward connection to earnings. If a customer’s data centre opens later, some equipment purchases or deployments may also move to a later period. Demand for AI services can remain strong while the timetable for supplying the infrastructure becomes less certain.

Financing concerns added pressure. Building these facilities requires substantial funding, and recent weakness in stock markets and bond markets has made access to financing harder for some participants. Market commentary also pointed to institutional investors reducing positions and borrowed exposure, which can intensify selling across related stocks.

These were concerns about future spending and deployment schedules. The election result alone does not establish that a particular AMD order was cancelled or that a nationwide construction ban has taken effect.

Sources: Reuters’ November 5 closing market report and “Tech-stock rout accelerates retreat from the AI trade”; Associated Press’ November 5 market report.

Why is Qualcomm’s smartphone business under pressure?

Qualcomm faces two connected problems: customers are buying fewer of its smartphone chips, and the growth elsewhere in its business has not yet fully replaced those lost sales.

The handset business lost approximately $1.82 billion of revenue compared with a year earlier. Automotive and internet-of-things products together added approximately $1.02 billion. Their growth was substantial, but it covered only part of the handset decline.

Its fiscal fourth-quarter results, covering the period ended September 27, show the imbalance clearly.

Source: Qualcomm’s Q4 FY2026 earnings release.

Apple’s modem transition is one source of pressure. A modem connects a phone to a mobile network. As Apple uses more of its own modem technology, Qualcomm loses an important source of chip sales. That product transition is separate from patent licensing: Qualcomm also announced renewed long-term licensing agreements, including with Apple.

Higher memory prices are another problem. Memory is a separate component inside a phone. When it becomes more expensive, manufacturers face higher device costs and consumers may delay upgrading. This can weaken demand for the processors and connectivity chips Qualcomm supplies, even though Qualcomm is not selling that memory itself.

Management also reported an improvement in China Android sales from the June-quarter low. The next test is whether that recovery can offset the continuing reduction in Apple-related chip sales.

Sources: Qualcomm’s earnings release and November 4 earnings-call remarks; Reuters’ reporting on smartphone demand, memory costs and the Apple transition.

Why didn’t Qualcomm’s AI plans reassure investors?

Qualcomm’s expansion offers new revenue, but investors also need to see how much profit that revenue produces. The latest forecast showed why those two questions should be considered separately.

Sources: Qualcomm’s earnings release; LSEG consensus estimates reported by Reuters on November 4.

The revenue midpoint exceeded expectations, while the profit midpoint was slightly below them. Calling this simply a weak sales forecast would miss the main issue: Qualcomm expects more business without an equally reassuring near-term profit outcome.

Qualcomm is raising prices to offset higher semiconductor costs, with the full benefit expected in the second half of fiscal 2027. Profitability therefore remains under pressure during the transition.

Custom data-centre chips also change the mix: management expects them to lower gross margins while adding to operating margins. Gross margin measures what remains after direct costs; operating margin also accounts for running the business. A product can produce less gross profit per dollar of sales while improving operating profitability if it requires proportionately less additional overhead.

The chip division’s forecast pre-tax margin was 20%-22%, versus 24% in Q4. Management attributed a three-percentage-point impact to adding data-centre activities to the division, including investments ahead of sales. This reporting change does not alter companywide guidance, so the segment comparison needs care.

This is why signing AI customers does not immediately resolve Qualcomm’s earnings problem. The company needs the new revenue to grow while its existing business absorbs cost increases and the loss of handset sales.

Why did AMD stock fall after beating earnings expectations?

AMD fell largely within the broader AI infrastructure selloff, despite results that showed strong demand. Its earnings announcement had initially prompted an after-hours gain of more than 6% on November 3.

Sources: AMD’s November 3 earnings release; LSEG consensus estimates and the initial stock reaction reported by Reuters. Q3 ended September 26, 2026.

Data-centre revenue reached approximately $8.5 billion, up 97% from a year earlier. This business includes EPYC server processors and Instinct AI accelerators. It should not all be labelled “AI GPU revenue”.

That growth makes AMD particularly sensitive to expectations for the next stage of data-centre construction. Its latest sales demonstrate current demand, while its future growth also depends on customers being ready to receive and deploy more equipment. The market can become less confident about that timetable even after a strong quarter.

What weaknesses still matter in AMD’s outlook?

AMD’s results also contained pressures outside its strongest business. Client revenue, largely associated with PC processors, rose 7% year over year, while gaming revenue fell 40%. The combined client and gaming segment declined 8%. Describing that combined fall as a collapse in PC processor sales would be inaccurate.

For Q4, management expects the combined client and gaming business to decline more than 20% sequentially. It also forecast an adjusted gross margin of approximately 55%, down from 56% in Q3.

These details leave AMD more dependent on its data-centre expansion to deliver the overall growth forecast. They are relevant vulnerabilities, but they do not establish that an earnings miss caused the November 5 fall. The stronger explanation is that investors reduced their willingness to pay for future AI growth as concerns about the supporting infrastructure increased.

Sources: AMD’s Q3 earnings release, quarterly filing and November 3 earnings-call remarks.

Author’s take: what should Qualcomm and AMD investors check next?

Create a separate test for each company before interpreting the next share-price move. A rebound in the semiconductor sector would not, by itself, show that either company’s business concerns have been resolved.

For Qualcomm, compare the next results with management’s timetable for price increases and the start of data-centre shipments. Check whether stronger Android and non-handset sales are replacing lost business, then examine the profit those sales generate. When comparing chip-division margins, account for the addition of data-centre activities so a reporting change is not mistaken for a fresh operating setback.

For AMD, use the latest revenue and margin outlook as the starting point. Watch for changes in customer deployment schedules, Helios system deliveries and the availability of the components needed to complete those systems. An actual reduction in guidance would carry more weight than a general political statement about AI construction.

Finally, review how much of your portfolio depends on the same data-centre spending cycle. Owning several different chip companies can still leave you exposed to one shared risk. Recording the specific business evidence that would change your view makes the next decision more grounded than reacting to the size of a daily fall.