The rapid rise of cryptocurrencies like bitcoin helped make AMD a darling of Wall Street. But cryptocurrencies have lost their luster and the company with the hottest stock is now feeling the pinch.
AMD stock plunged 20% in premarket trading after the chip maker announced third quarter earnings that fell short of Wall Street's expectations. It warned of a weaker outlook.
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The company said that slowing sales were "caused by the decline in blockchain-related demand" for its graphics processors. The blockchain sector as a whole has been significantly cooling because of volatility in cryptocurrency markets.
AMD's (AMD) powerful graphic processors have been instrumental for running crypto's backend technology and its chips seemed preferable to the ones produced by rivals Intel and Nvidia.
Revenue from blockchain was "negligible" in third quarter compared to the same period in 2017, AMD's CFO Devinder Kumar said on an earnings call.
AMD expects revenue to fall below analyst's expectations next quarter, too, he said.
It wasn't all bad news at AMD. Its third quarter revenue jumped by 4% compared with a year ago to $1.65 billion, but fell below Wall Street expectations for $1.7 billion.
AMD has dropped 30% since it hit a 12-year-high in September. But it's stock is still up a whopping 121% for the year.