AMD entered Tuesday having beaten analysts’ top and bottom earnings estimates for three straight quarters. Make that four.

But that’s just the narrow view. The US chipmaker also entered the day bearing the boulder-heavy weight of the market’s AI-nxiety after rival Intel’s wipeout last week following a disappointing third quarter result. AMD passed the Silicon Stress test and gifted semiconductor investors a sigh of relief.

‘Real Silicon and Real Revenue’

“The market spent October questioning whether AI capital spending converts into revenue and cash flow,” wrote Zacks Investment Research senior equity strategist Bryan Hayes, on Tuesday. “The debate shifted from capability to financing, and it took real casualties among the companies carrying debt to fund the buildout.” AMD certainly felt the pressure, with its shares down 23% in the last month.

Last week, long-standing competitor Intel was hit even harder. Its $16.5 billion third quarter revenue was in line with expectations, but its executive’s fourth quarter revenue target of $15 billion to $16 billion came up short, kind of like your putting game. Intel’s stock nose-dived nearly 29% in a single day and is down more than 35% in the last week. Executives blamed the weak forecast on a worse-than-expected decline in the personal computer market, where manufacturers are getting slammed by rising memory costs. Global PC shipments plunged 21% in the third quarter, according to Counterpoint Research, weighing heavily on Intel’s legacy income. Still, there was a silver lining: Intel’s data center and AI segment rose 78% and made $3 billion in operating profit.

Makers of central processing units (CPUs) like AMD and Intel spent years playing kid brother to Nvidia and its GPUs in the AI market. But with the advent of agentic AI like Meta’s wildly popular Muse, which requires the continuous general-purpose computing power of CPUs, their value has exploded. While AMD also makes CPUs for PCs, it’s not as exposed as its rival. Nearly two thirds of revenue comes from the data center unit, meaning what was a silver lining for Intel last week proved a golden ticket for AMD on Tuesday:

• Revenue at AMD’s data center segment nearly doubled, climbing 97% year-over-year to a record $8.5 billion in the third quarter. Hayes, the Zacks equity strategist, said anything above $8.3 billion could be taken to mean AI spending “is landing on real silicon and real revenue.”
• The Santa Clara-based chipmaker’s $13.4 billion in revenue and $7.2 billion gross profit came in ahead of expectations, and its $17 billion outlook for fourth quarter revenue is well ahead of the $16.2 billion average analyst estimate. Beyond the fourth quarter, CEO Lisa Su said last month AMD plans to “substantially increase our supply in 2027” to meet soaring demand, while Intel leader Lip-bu Tan expressed disappointment his firm can only supply about half of what customers want.

Rally the Troops: Chipmakers had shown signs of life leading up to AMD’s report yesterday. Broadcom closed up more than 3% and Micron and Nvidia more than 2%. AMD shares, which traded up 8.3% after hours following its earnings report, are poised for gains today. Wall Street doesn’t see the upward trajectory stopping any time soon, either: The average $655 price target of 41 analysts surveyed by Zacks implies a 40% upside on AMD’s stock in the next 12 months.

Honey, Disney shrunk the workforce. Again. And the latest round of headcount reductions may just be the largest, too.

The House of Mouse is now targeting thousands of job cuts as many managers across the entire entertainment empire have been tasked with achieving 20% in annual cost savings, according to a Bloomberg report. It’s the latest, and possibly most bruising, spate of layoffs in a long cost-cutting campaign that spanned Bob Iger’s entire second stint as CEO.

It’s a Much Smaller World, After All

Indeed, Iger’s return to the throne commenced with job cuts totaling 7,000 through early 2023. Smaller cuts continued through 2024, including a 14% headcount reduction at animation studio Pixar and a 13% cut at National Geographic amid broader cuts across the company’s TV unit. By March 2025, Disney cut 6% of its workforce, or some 200 roles, across ABC News and other TV units, and shuttered the news-and-data-analytics website FiveThirtyEight (whose election guru alumni, for what it’s worth, have remained polling analysis trendsetters this midterm cycle). Just a couple months later, several hundred more employees across film, TV and corporate finance were let go.

The Iger era ended and the Josh D’Amaro era began earlier this year, but Disney has been putting out nearly as many pink slips as Marvel superhero sequels:

• D’Amaro spearheaded a round of about 1,000 layoffs almost immediately after taking the helm in mid-March earlier this year, with rolling layoffs continuing throughout the summer including roles across Marvel, ESPN, Pixar and National Geographic.
• In August, the company offered early retirement buyouts to many veteran executives, followed by several hundred reductions mostly across HR and IT departments in September, marking the third round of layoffs in D’Amaro’s first six months.

Misery Loves Media Companies: Behind the seemingly endless bloodbath is a promise to deliver double-digit earnings per share growth in the current fiscal year. And it comes as D’Amaro promises to institute a “culture of efficiency.” Bloomberg reported that theme parks, TV channels and the movie studio will be affected disproportionately by the latest cost-cutting measures. Last month, The Wall Street Journal reported that the company was in the early stages of a massive restructuring of its TV business to reorient it around the growing streaming business instead of around the sinking linear TV and cable business. Laid-off Disney employees are hardly alone in their anguish. Both Netflix and the new-look Skydance have announced layoff plans in recent months.

When it comes to AI, Shopify may have to verify.

Like many of its peers, Shopify is spending big on the technology, but investors want to know whether it’s paying off. Its third-quarter earnings report showed that it pulled in $3.74 billion in sales, below the $3.75 billion Wall Street analysts had expected. It’s the company’s first revenue miss in four years, according to Bloomberg data. Gross merchandise volume and subscription sales also came in below expectations. The Canada-based company’s stock plunged on the news, ending Tuesday down 8.7%.

Retail Therapy, No More

Shopify’s subscription-based e-commerce platform is behind the scenes of millions of small businesses and independent brands selling clothing, beauty products, home goods and more, offering a lens into the consumer and retail market for direct-to-consumer businesses. Its less-than-ideal earnings report comes as various reports and studies (including Shopify’s own) signal that consumers are more price-conscious nowadays, forgoing their discretionary items amid still-high prices for everything from gas to groceries. Why buy from an independent or even luxury brand when you can find deals at big box retailers like Costco?

But Shopify’s earnings report also reflects the need for tech companies at large to prove that their AI spending is worth it:

• Shopify has been hyperfocused on Sidekick, its AI assistant that it launched in 2023. Its CEO Tobias Lütke also told employees via an internal memo last year that using AI internally is a “baseline expectation,” and the company is embracing “agentic commerce,” which entails AI acting on the behalf of shoppers. But that’s all a potentially pricey endeavor. The company expects operating expenses between 29% and 30% of revenue in the fourth quarter while its free cash flow margin stays flat.
• “On a year-over-year basis, subscription-solutions gross margins compressed primarily from incremental AI spend on Sidekick, partially offset by efficiencies and support,” Shopify’s Chief Financial Officer Jeff Hoffmeister said on a call with analysts.

A Penny Spent Is a Penny Earned: Of course, the hope is that the company’s AI spending will eventually come back around to add to the balance sheet. “Sidekick attracts more merchants to Shopify, which manifests in the financials and subscription solutions, and it propels more merchant success, which materializes in merchant solutions,” Hoffmeister added.