What happened: Advanced Micro Devices (AMD) dropped 8% in premarket trading on Wednesday.

What’s behind the move: The chipmaker reported record revenue and second quarter earnings on Tuesday, beating Wall Street expectations on both top and bottom lines.

However, the company’s results and forecast failed to impress investors looking for bigger beats.

“It was priced for something much closer to a blowout,” Shay Boloor, Futurum chief market strategist, told Yahoo Finance after the earnings report. “It was priced for an exceptional result, and this was not an exceptional result.”

AMD reported revenue of $11.54 billion, up 50% from $7.69 billion a year prior, topping Wall Street expectations. Adjusted earnings per share came in at $1.66 against the $1.62 expected.

Wall Street even expected booming growth in data center revenue, which more than doubled year-over-year and now represents 58% of total revenue, up from 42% a year ago.

“The company did beat across the board, but it wasn’t enough to reset expectations for a stock that’s trading nearly 60 times earnings,” Boloor said.

Capital expenditures also increased significantly, reaching $808 million for the quarter, up from $282 million in the year-ago period and $389 million in the March quarter.

“That’s a shocking upside revision for the capex number,” the strategist added.

What else you need to know: For the current quarter, AMD expects revenue of approximately $13 billion, plus or minus $300 million. While that exceeds some analyst estimates of $12.5 billion, it falls short of the highest forecasts, which called for up to $14 billion.

The company also warned of a slowing PC market, though it expects to outperform the broader industry.

“Looking to the second half of the year, we’re planning for a softer PC market as higher memory and component costs weigh on demand,” CEO Dr. Lisa Su said during the company’s earnings call.

“Against this backdrop, we expect our client business to perform better than the market,” she added.

AMD noted that Gaming graphics revenue declined year over year, as higher industrywide component costs drove up graphics card prices and weighed on overall demand.

Like many semiconductor stocks, AMD has posted an impressive gain this year, though the shares have experienced periods of volatility in recent months. The stock is down more than 10% from its June all-time high, but it remained up more than 140% year to date as of Tuesday’s close.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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