(Reuters) – High-flying semiconductor stocks slipped in trading before the bell on Wednesday after Advanced Micro Devices’ disappointing current-quarter revenue forecast added to investor worries over sluggish demand for non-AI chips.

AMD targets revenue of $5.4 billion, plus or minus $300 million for the first quarter, below analysts’ estimate of $5.73 billion, according to LSEG data. That overshadowed the company near doubling its AI processor projections to $3.5 billion from $2 billion.

After “expectations for AMD (reached) a fever pitch in recent weeks and months.. resetting those expectations is not necessarily a bad thing,” said Bernstein analyst Stacy Rasgon.

That said, “the uber-bullish expectations for datacenter GPUs are probably out of reach at least in 2024.. making an expensive stock even more so.”

Shares of Santa Clara, California-based AMD dropped 6.6% to $160.77 in premarket trading on Wednesday. They have climbed more than 137% in the past 12 months.

Nvidia, Micron Technology, Qualcomm, Broadcom and Intel fell between 0.5% and 2.5%. iShares Semiconductor ETF and VanEck Semiconductor ETF both fell 1.9%.

AMD’s update follows Intel’s bleak first-quarter revenue outlook on Thursday, as the chipmaker plays catch-up in the AI race while also dealing with a weak PC market.

AMD’s data center segment, which includes its traditional server chips along with its AI processors, grew 38% in the fourth quarter from a year earlier to $2.3 billion but demand from cloud computing companies remained “soft,” CEO Lisa Su said.

The company’s price-to-earnings (PE) ratio at 43.87 is the highest among the biggest U.S. chipmakers, per LSEG data. By comparison, Intel’s PE multiple is 29.78, Nvidia at 30.18, Qualcomm 14.94 and Micron’s 34.33. Comparatively, a lower multiple reflects an attractive investment opportunity.

At least five brokerages raised their price targets on AMD, pushing its median price target to $190 and implying a 10.4% expected rise in shares over the next 12 months.

“Was a high bar, no doubt, but AMD delivered where it mattered,” said TD Cowen analysts.

(Reporting by Medha Singh in Bengaluru; Editing by Sriraj Kalluvila)

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