• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock AMD Plunges to a Critical Support Level: Is Now the Time to Go Long?
Stock

AMD Plunges to a Critical Support Level: Is Now the Time to Go Long?

by April 16, 2024
by April 16, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Leading chip designer Advanced Micro Devices, Inc. (AMD) is at a critical juncture, one which could go either way depending on the dynamics of the market and its specific industry. The stock’s technical and fundamental indications are not only mixed, but on opposite extremes.

Now that AMD’s price has fallen to a key level, bullish investors may wonder if it’s wise to buy the dip or avoid a falling knife.

AMD’s Technical vs. Fundamental Outlook

AMD’s technical strength is rapidly declining: with a StockCharts Technical Rank (SCTR) score of 89.9, the chipmaker is showing up on bearish scan results, including the P&F Double Bottom Breakdown, P&F Descending Triple Bottom Breakdown, and Stocks in a New Downtrend (ADX), all of which can be found on the StockCharts Sample Scan Library.

Fundamentally, a ray of light shone on Tuesday when AMD unveiled its latest new processors designed to power AI-enabled PCs—Ryzen Pro 8040 (laptop) and the Ryzen Pro 8000 (desktop)—which the company claims are the most powerful chips for business computing. If they perform as AMD expects, these chips can potentially catapult AMD’s position against rivals Nvidia (NVDA) and Intel (INTC) in the generative AI arena.

What are analysts saying about upside price targets? There’s a vast range: from $180 to $270. To be fair, bearish analyst targets are also well below current prices, around $110 to $120. So, even if you’re bullish, consider the downside projections (and why some analysts might be bearish).

The Macro View

While AI technology had simmered in the tech undercurrents for years, the AI arms race ignited on November 30, 2022, with OpenAI’s release of ChatGPT. Powered by Nvidia’s powerhouse GPUs, this watershed moment marked a seismic shift in the semiconductor industry.

CHART 1. WEEKLY CHART OF AMD: The blue vertical line marks the week ChatGPT was released to the public, creating a fierce competitive environment among chipmakers.Chart source: StockCharts.com. For educational purposes.

While many semiconductor stocks fell at the end of November 2022 due to geopolitical hurdles (US export restrictions to China) and general expectations of an economic slowdown, this also marked the moment when AMD began significantly underperforming NVDA (soon to become the top AI chip producer).

Against NVDA, AMD is underperforming by over -68%. However, AMD managed to overtake Intel (INTC) by a stunning 731%. Relative to the Dow Jones U.S. Semiconductors Index ($DJUSSC), AMD’s performance is declining, though still leading the average by 48%. And against the S&P 500 ($SPX), AMD’s performance is up 238%.

Looking at the technicals from a macro view, is AMD in a downtrend or a near-term dip?

Is it Time to Buy the Dip?

CHART 2. DAILY CHART OF AMD. AMD may be in a relatively deep decline, but the momentum, support levels, and fundamental story tell a different story. Chart source: StockCharts.com. For educational purposes.

The fundamental story fueling a potential bounce is more important than the technical indications of a bullish reversal. AMD broke below support levels of $170 and (below that) $165, both bearish indications for the chipmaker.

As the Relative Strength Index (RSI) steadily approaches the 30 line (which marks the oversold threshold), note the rising buying pressure, as indicated by the Chaikin Money Flow (CMF) climbing above the zero line—a signal that buyers are now entering the market.

AMD is resting right above a critical Fibonacci retracement level (50%), which explains why more technically inclined buyers might have begun accumulating shares of the stock (the 61.8% to the 50% levels are often buy targets for bullish traders looking to go long).

What This Means for Your Portfolio

So, does this mean you should buy the dip? It depends on how bullish you are on AMD and why you might have a bullish bias. Perhaps waiting for a stronger bounce with more significant momentum may be the thing to watch if you are. AMD is in a buying range, but how you approach accumulating the stock depends on you and your strategy.

Also, note that AMD’s earnings report is on April 30. Monitor the action leading to and/or following the report.

The Bottom Line

AMD is at a crucial juncture, balanced between tepidly bearish technical signals and promising fundamentals from its latest AI-capable processors. The broader semiconductor sector’s struggles—sparked by geopolitical tensions and economic fears since ChatGPT’s launch—frame AMD’s precarious market stance. Whether to buy the dip hinges on whether you believe AMD can redefine its competitive edge, jump ahead of its rivals, and challenge NVDA. AMD is within buy range, but you may want to nuance your entry if you’re itching to go long. Be sure to add AMD to your StockCharts ChartList.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

You Might Also Like
  • What Inflation Fear? Strong Retail Sales Fuel Growth
  • HYG Shares Outstanding Showing Excessive Enthusiasm
  • When to BUY, When to SELL, and When to SIT On Your Hands
  • The Hoax of Modern Finance – Part 2: Indicators, Terminology, and Noise
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Amazon owes $525 million in cloud-storage patent fight, U.S. jury says
next post
Massie threatens to oust Speaker Johnson if he doesn’t step down over foreign aid plan

You may also like

S&P 500 Breakdown Alert! Downside Targets Explained

January 10, 2025

Breakdown in Mega-Cap Growth Confirms Bear Phase

April 20, 2024

The Market Breadth Indicator You Should Be Following

May 6, 2024

Citi Predicts $3,000 Gold by 2025 — What You Need...

July 12, 2024

Surprise! These Grocery Stocks are Crushing 2024 Targets

May 24, 2024

S&P 500 Regains its Uptrend

April 29, 2023

This S&P 500 Rally is Defying the Experts – Here’s...

September 19, 2024

Two Highly Entertaining Stocks to Watch

January 24, 2023

Gold Prices: De-Dollarization, Inflation, and $3,000 Gold—What You Need to...

January 14, 2025

Finding Pure Strength Using the PMO (DP Trading Room Video)

January 22, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,630 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Unlock the Secret To Finding Strong...

    October 21, 2024

    Equities Maintain “Go” Trend as Another...

    April 17, 2023

    Why the NAAIM Exposure Index Matters...

    February 8, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here