AMD stock plunges nearly a quarter after lackluster earnings report

AMD's stock price is down over 23 percent today on huge volume as investors are resetting expectations after yesterday's lackluster earnings report. Currently trading at $10.43, AMD's share price is still up 178.88 percent versus a year ago but way down versus the $15.55 seen earlier this year.

Yesterday's earnings report was largely in-line with Wall Street expectations but after such a huge run-up over the last couple of months the stock needed a massive earnings beat or a blow-out outlook to keep the momentum going. Investors bid up the stock significantly on huge expectations about Ryzen and in lesser part the Radeon RX Vega and now AMD needs to start delivering profits in the near future to justify its current valuation.

Yesterday, AMD's share price fell over 7 percent in after-hours trading after the publication of the first-quarter results. After the opening bell rung today, losses accelerated as the company is still on a path to profitability and investors may be spooked that the outlook may be less rosy than hoped.

In particular, some analysts are worried by AMD's forecast that second-quarter gross margin will be just 33 percent, down versus the 34 percent posted in the first-quarter. This raises concerns that AMD may once again be struggling to turn a good product into decent profits.