AMD shares fall more than 13% on weak outlook, dragging other chipmakers down

AMD shares were down 13.9% on Friday as investors digest the company's disappointing preliminary third-quarter results Thursday that were well below its initial guidance.

The chipmaker lowered its sales forecast for the third quarter on Thursday, blaming a larger than expected decline in personal computer sales and supply chain problems.

AMD now expects preliminary quarterly revenues of $5.6 billion, thanks to "reduced processing shipments". This is more than $1 billion less than the $6.7 billion AMD had previously predicted as its midpoint revenue expectation for the quarter.

The company also stated that its non-GAAP gross profit margin is expected to be around 50%, whereas it previously expected gross margin to reach closer to 54%.

Piper Sandler and Mizuho Securities, KeyBanc Capital Markets, KeyBanc Capital Markets, and Stifel all reduced their AMD price targets in notes to clients on Friday, but each firm maintained a buy rating or an overweight rating.

Other chipmakers, such as Intel or Nvidia, saw their shares drop by more than 5% and even 8% respectively. This could be due to weak PC demand and supply chain issues that could impact other semiconductor players.

WATCH: AMD's third quarter cuts were deeper than the market expected, according to Bernstein's Stacy Rasgon