Artificial intelligence (AI) chip stocks are having a torrid time on the market in 2025, and that's not surprising. The sector has been hit hard by multiple headwinds of late, such as the viability of the huge sums being spent by tech giants on beefing up AI hardware and the growing concerns about a possible economic downturn in the U.

AMD has fallen short of the market’s hopes for its AI business, as Nvidia continues to dominate. There is little sign of that changing, according to Jefferies.

Advanced Micro Devices (NASDAQ:AMD) investors have been pinning their hopes that its latest AI-focused chips will help it close the gap on