Advanced Micro Devices (AMD, Financials) announced a $6 billion stock buyback on Wednesday, joining peers in returning capital to shareholders as growth in AI-related semiconductor demand shows signs of cooling.

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AMD's latest buyback brings its total repurchase authorization to about $10 billion. The announcement follows a $10 billion AI collaboration deal with Middle Eastern firm Humain, revealed just one day earlier.

Shares rose as much as 6.4% on the news. However, the stock remains down over 6% in 2025, underperforming the Philadelphia Semiconductor Index, which has slipped less than 1% year to date.

Free cash flow dropped more than 33% in the quarter ended March to $727 million. AMD reported $6.05 billion in cash and equivalents and $7.70 billion in current liabilities as of March 29.

Despite being positioned as a key challenger to Nvidia's AI dominance, AMD is facing pressure from custom processor makers and Nvidia's entrenched market position. AMD's shares declined 18% in 2024 while Nvidia surged over 170%.

Competitors are also returning capital aggressively. Broadcom (AVGO, Financials) announced a $10 billion buyback in April, and Qualcomm (QCOM, Financials) launched a $15 billion repurchase in November.

CEO Lisa Su said the move reflects confidence in AMD's strategic direction, growth prospects, and ability to consistently generate strong free cash flow.

Investors will be watching to see whether AMD's recent strategic alliances help close the competitive gap in the AI chip sector.

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This article first appeared on GuruFocus.

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