AMD’s 2nm Venice Production Begins, but a Billion-Dollar Selloff Steals the Spotlight

AMD shares fell 10% amid sector selloff, but record data center revenue, first 2nm server chip, and 46% server CPU share highlight strong fundamentals.

The week that should have belonged to AMD’s historic ramp of the first 2-nm server chip ended with a gut-wrenching 10.19% stock rout. Shares closed at €404.55 on Friday after a one-two punch from Broadcom’s disappointing AI chip sales forecast and a stronger-than-expected US jobs report erased roughly $1 trillion in market value from the semiconductor sector. Yet beneath the surface, the company’s fundamental story has rarely looked stronger.

The selloff had two triggers. Broadcom’s third-quarter revenue guidance for its AI chips came in at $16 billion, missing the $17.2 billion consensus. More worrying for the market, Broadcom did not lift its full-year AI semiconductor forecast. Then the May US jobs report showed 172,000 new positions and a steady 4.3% unemployment rate—strong enough to dampen hopes for rate cuts. According to CME FedWatch, the market is now even pricing in the risk of rate hikes by year-end. For richly valued semiconductor names, that combination proved toxic. The SOXX semiconductor ETF lost 10.4%, with Arm Holdings sliding 12.8% and Intel dropping 11.3%.

But AMD’s operational picture tells a very different story. In the first quarter of 2026, revenue surged 38% year-over-year to $10.3 billion. The data center business jumped 57% to $5.8 billion, while free cash flow tripled to a record $2.6 billion, representing 25% of sales. For the second quarter, management guided for around $11.2 billion in revenue—roughly 46% annual growth and well above the consensus of $10.5 billion.

Perhaps the most striking technical achievement is the launch of AMD’s next-generation EPYC processor, code-named “Venice,” which is already being manufactured on TSMC’s 2nm node in Taiwan. It marks the industry’s first high-performance computing chip in volume production on that advanced process, packing up to 256 cores with a claimed 70% performance leap over the previous generation. Memory bandwidth more than doubles from 614 GB/s to 1.6 TB/s, and CPU-to-GPU bandwidth also doubles—critical for cloud and AI workloads. A follow-on design called “Verano” will optimize for energy efficiency and LPDDR support. AMD also plans to bring some production to TSMC’s Arizona fab.

That chip arrives as AMD is already taking share at historic rates. According to Mercury Research, AMD captured a record 46.2% of server CPU revenue in the first quarter of 2026. Its overall x86 market share rose to 32.6%, up nearly six percentage points year-over-year. For the first time, data center revenue—$5.8 billion—surpassed Intel’s equivalent segment. CEO Lisa Su has more than doubled the addressable server CPU market forecast to over $120 billion, with annual growth above 35% through 2030, driven by the rise of agentic AI workloads.

Still, near-term headwinds remain. CFO Jean Hu warned that the MI450 accelerator and the Helios rack-scale system—both slated for production ramp in the second half of 2026—will carry lower-than-average gross margins during their initial phases. In addition, AMD expects tight memory supply to constrain CPU shipments in the second half, and consumer PC and gaming demand could soften due to memory price increases. The company’s official Q2 2026 earnings release is set for August 4, with revenue guided around $11.2 billion and a non-GAAP gross margin of roughly 56%.

Despite the selloff, Wall Street remains constructive. S&P Global’s survey of 51 analysts yields a consensus “Strong Buy” rating and an average price target of $479.77. The three most recent calls—from Barclays, TD Cowen and Mizuho on June 1—carry an average target of $626.67. This week brings two major catalysts: Oracle’s fiscal fourth-quarter results on Wednesday, which could recalibrate AI infrastructure spending expectations, and the US consumer price index on Wednesday followed by producer prices on Thursday. AMD shares still trade more than 112% higher year-to-date, and with a 52-week low of €100.58 behind it, Friday’s decline looks more like a sharp correction than a trend reversal.