Advanced Micro Devices needs a strong quarter and a bold forecast when it reports results after the U.S. market closes Tuesday, investors told Bloomberg. The stock has already been hit hard by trouble at a larger rival, and the bar for a good report has gotten higher.

Why is AMD stock falling alongside Intel?

AMD’s shares fell about 17% over two days, moving in step with Intel. Intel’s stock had its worst day since at least 1982 on Friday after it issued a weak outlook. AMD dropped 10% that same day and slid another 7.5% on Monday. Even so, the stock is still up more than 120% this year.

“A modest report just won’t cut it,” said Neville Javeri, a portfolio manager at Allspring Global Investments, which owns the stock.

What does AMD need to deliver in its third-quarter report?

Analysts expect AMD’s third-quarter earnings to jump 92% on a 41% rise in revenue. The company had guided for about $13 billion in sales following a record second quarter, and expectations are high for it to beat that mark.

Some of that hope rests on processors. AI agents lean heavily on CPUs, AMD’s chief technology officer argued in July. The success of Meta’s Muse agents has led some analysts to raise their price targets on the stock. Meta is AMD’s second-largest customer, and its Helios AI racks are now being tested there.

Why are AI spending fears hitting chipmakers?

The bigger risk is the broader mood around artificial intelligence. Major spenders such as Alphabet and Meta have been punished by investors for spending that eats into their cash. That has raised fears of a pullback in AI spending, which would hit chipmakers hardest. Investors saw a similar reaction in July, when TSMC’s shares fell even though the company reported record revenue.

Not everyone is willing to wait and see. “I’m just not super comfortable with the valuation,” said Jim Worden of the Wealth Consulting Group, who has sold his AMD shares.

AMD’s results on Tuesday will show whether the company can calm those nerves or whether the selloff has further to run.

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