It's a rough morning for chip investors. Advanced Micro Devices (AMD) shares slid nearly 4% in Thursday's premarket trading, part of a broader selloff in semiconductor stocks triggered by Taiwan Semiconductor Manufacturing Company's (TSM) second-quarter earnings and a notably beefed-up capital spending plan.

The broader market felt the chill too: Nasdaq futures were down 0.89%, and S&P 500 futures slipped 0.31%.

Taiwan Semiconductor Sparks Sector Pullback

Taiwan Semiconductor reported better-than-expected Q2 results and raised its capital expenditure forecast. While that's great news for the long-term AI chip narrative, investors seemed to focus on the sheer scale of future spending. The result? A wave of profit-taking across the semiconductor space.

AMD, which has surged more than 230% over the past year, was among the hardest-hit large-cap chipmakers. When you've run up that much, any excuse to take some chips off the table looks tempting.

AMD Technical Picture Remains Constructive

Despite Thursday's dip, AMD's technical setup isn't all doom and gloom. The stock still trades above its longer-term moving averages: 3.7% above its 50-day simple moving average of $493.09, 40.4% above its 100-day average of $364.23, and 74.4% above its 200-day average of $293.31.

That said, near-term momentum has cooled. Shares are now 4.2% below the 20-day simple moving average of $534.17. The relative strength index sits at 51.74, right in neutral territory — not overbought, not oversold.

Key resistance is around $546.50, while support sits near $498.00, just above the 50-day moving average. So there's a cushion, but the stock is testing it.

AI Growth Keeps Analysts Bullish On AMD

AMD designs processors and graphics chips for everything from PCs and gaming consoles to data centers and cars. But the big story over the past year has been its aggressive push into AI accelerators, which has been the main engine behind its stock's stellar run.

The company's next earnings report is scheduled for Aug. 4. Analysts are looking for earnings of $1.55 per share on revenue of $11.28 billion — a huge leap from the year-ago quarter's $0.48 per share and $7.68 billion in revenue.

Wall Street isn't panicking over today's move. The consensus rating on AMD is Buy, with an average price target of $521.47. Recent analyst actions include Bank of America raising its target to $620, KeyBanc boosting its to $725, and TD Cowen lifting its to $675. So the long-term view remains upbeat, even if the market is taking a breather.

AMD Price Action

AMD shares were down 3.62% at $510.01 in premarket trading on Thursday, according to market data.