Why AMD Stock Fell on Thursday

On Thursday, Advanced Micro Devices (AMD) saw its stock price drop by 8.1%, as the value of oil climbed due to renewed conflict in the Middle East. The broader market also took a hit, with the S&P 500 and Nasdaq Composite both slipping by 1.2% and 2.6%, respectively. The source of this oil price surge was attacks in Saudi Arabia carried out by Houthi rebels, raising concerns about potential disruptions to oil supplies.

Brent Crude, a widely-used benchmark for oil prices, reached a level of $112 per barrel on Thursday, its highest point since May of this year. This increase in energy prices could exacerbate the already high inflation rates, complicating the outlook for borrowing costs. The demand for AI infrastructure is growing rapidly and is being largely funded through debt, as major tech companies see their cash flows dwindle.

Meta Platforms' third-quarter report revealed that they are continuing to make significant capital investments, resulting in a negative free cash flow (FCF) for the first time since 2012. While there's no indication that this spending will slow down, there is concern about whether the current pace can be maintained if borrowing costs continue to rise and how this might impact AMD's financial situation.

Another aspect related to Meta's earnings was the approval of a new non-voting share class, specifically designed to raise capital without reducing CEO Mark Zuckerberg's voting power.