Key Highlights

● AMD closed at $566.42 with no company announcement behind the move.

● The PHLX Semiconductor index ended a four-day winning streak.

● Alphabet reported negative free Cash Flow of $9.07 billion and Capital spending of $51.36 billion.

● Intel plunged after hours on weak fourth-quarter guidance.

Advanced Micro Devices (NASDAQ:AMD) had no news of its own on Thursday, but it could not escape a broad pullback in semiconductor stocks sparked by renewed worries about AI spending.

Moving with the pack

Advanced Micro Devices drifted lower on October 29, closing at $566.42, according to market data. There was no company announcement behind the move. The stock simply traded in step with the rest of the semiconductor sector, which retreated across the board.

The PHLX Semiconductor Index ended a four-day winning streak, and AMD was one of the names that helped drag the Nasdaq-100 down to 29,402.51. For a company whose Business is tied so closely to data-center demand, a day dominated by doubts about AI budgets was always going to be uncomfortable, regardless of what AMD itself had to say.

The chip sector's rough Thursday

AMD was hardly alone. Marvell Technology (NASDAQ:MRVL) sank to $218.34 after one report said it was in advanced talks to acquire Lumentum (NASDAQ:LITE). Micron (NASDAQ:MU) fell to $934.27 as memory names cooled. Nvidia (NASDAQ:NVDA) edged lower to $213.66, and Intel (NASDAQ:INTC) slid to $92.07 before its earnings.

After the close, the pressure intensified. Intel plunged in extended trading after its fourth-quarter guidance came in well below forecasts, and Nasdaq-100 futures fell as a result.

Only a few chip stocks bucked the trend. KLA (NASDAQ:KLAC) jumped after record quarterly Revenue of $4.14 billion and an upbeat forecast.

The AI spending question returns

The catalyst for the chip retreat came from one of the industry's biggest customers. Alphabet (NASDAQ:GOOGL) reported results on Wednesday evening that included negative free cash flow of $9.07 billion and capital spending of $51.36 billion for the quarter. The stock suffered its worst day since its 2004 IPO on Thursday, erasing about $500 billion in market value.

One report said the results "reignited concerns over mounting AI costs." For chipmakers like AMD, which sells data-center processors and AI accelerators, that matters because cloud giants' spending is their revenue. Any sign that investors are losing patience with that spending can weigh on chip stocks even on days without company-specific news.

One market analyst said that "markets are no longer rewarding companies simply for investing heavily in AI."

A rotation, not a rout

The wider market painted a more nuanced picture. More than 400 S&P 500 members closed higher even as the index slipped 23.59 points to 7,720.39. The Russell 2000 climbed 28.71 points to 2,859.22, and New York Stock Exchange advancers beat decliners by 1.95 to 1.

Volume was in line with the norm, at 17.05 billion shares against a 17.09 billion 20-day average, suggesting investors were reshuffling portfolios rather than fleeing stocks.

"Money is rotating within the market rather than leaving it," one market strategist said, according to market commentary.

Rates in the background

Thursday's data added another headwind for high-growth stocks. Third-quarter GDP grew faster than forecast, and September PCE Inflation ran hot. The Federal Reserve held rates steady on Wednesday in a 10-2 vote, with two officials preferring a hike, and traders continued to lean toward a December increase.

What to watch

AMD's near-term path likely hinges on how the chip sector absorbs Intel's after-hours drop and Amazon (NASDAQ:AMZN)'s $220 billion capex plan when trading resumes Friday. Amazon's commitment to heavy spending could support Demand for data-center chips, even as investors fret about the cost.

Arm (NASDAQ:ARM) reports in early November, offering another read on chip demand. On the macro front, Friday's Employment Cost Index and the Fed's December 8 to 9 meeting will shape appetite for richly valued tech names like AMD.