• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock AMD at a Crossroads: Buy Now or Brace for More Losses?
Stock

AMD at a Crossroads: Buy Now or Brace for More Losses?

by May 2, 2024
by May 2, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Advanced Micro Devices (AMD) slightly topped Wall Street’s earnings and guidance expectations on Tuesday, but, instead of rallying, its stock tumbled 7%. AMD was at its 61.8% Fibonacci retracement level, which, for many traders, can present an ideal “buy low” opportunity or a “get-ready-to-exit” threshold for those who bought the stock near the bottom of the uptrend. 

AMD’s decline brings several questions to the fore: Is AMD a buy or a sell? What technical or fundamental factors might drive this decision? What are the key levels to watch?

The Fundamental Picture

AMD’s EPS (61 cents) and revenue ($5.47 billion) barely edged above analyst consensus; they were practically in line with what Wall Street expected. The company’s current quarter estimates also matched analyst forecasts. It’s nothing bad, but nothing great, either.

The immense potential growth driver, however, is AMD’s forecasted sales of AI chips—around $4 billion this year. Still, the stock came tumbling down. So, if AMD’s plunge was the market’s way of correcting an overvaluation, then is the company’s AI chip forecast already baked into the current price level?

Analyst price targets are mixed. But before that, let’s look at the technical picture.

AMD and the AI Revolution

Viewing AMD stock on a weekly chart, you can see it has been trending downward since hitting an all-time high of $227.30 in March.

CHART 1. CHART OF AMD STOCK. AMD’s relative performance against NVIDIA, the leader in AI chips, begins sinking after November 2022. AMD is also trailing the semiconductor industry. Chart source: StockCharts.com. For educational purposes.

Returning to the second week of November 2022 (see vertical blue line), you can see AMD’s slow but steady climb relative to the larger Tech sector (XLK). That line marks the onset of the current AI trend, sparked by OpenAI’s public launch of ChatGPT. This budding AI “revolution” has thrust chipmakers like AMD into the limelight, positioning the industry as a fertile ground for expansion and a fiercely competitive arena for semiconductor companies.

So, while AMD is still outperforming the general Tech sector by 21%, it’s trailing the larger semiconductor industry ($DJUSSC) by -25.85% and NVIDIA, the world’s leading AI chipmaker, by a whopping 70%.

AMD missed the AI boat and fell drastically behind. However, according to its forecasts, AMD’s prospects of catching up are rapidly improving. So, is this what’s driving indecision at the current levels?

In AMD’s daily chart (see below), the stock is trading at the 61.8% Fib retracement level. This is a make-or-break level for traders: for those looking to go long, it represents a deep pullback (a break below this level increases the prospect’s bearishness). It also represents the lowest level to exit a long trade for those who got in toward the bottom of the latest uptrend.

CHART 2. DAILY CHART OF AMD. The stock is at a critical juncture, and its next move can trigger either a strong buy or sell signal, depending on the outcome and the underlying momentum.Chart source: StockCharts.com. For educational purposes.

The Money Flow Index (MFI) is trending upward, creating a bullish divergence between price and the buying pressure it represents. The Chaikin Money Flow (CMF) indicates stronger selling pressure. If you plan on going long, you want to see both indicators trending in the same direction.

3 Levels to Watch

The 61.8% Fib retracement line: A close below this level would invalidate and possibly reverse the longer-term uptrend.The $133 price range: The low of 2024 and high of 2023 may serve as the next level of support.The $124 price range: A cluster of resistance and consolidation levels in 2023, this range may serve as an even lower area of support; however, a break below can signal further downside risk.

What Are Analysts’ Price Targets?

Analyst price targets for 2024 are fairly wide:

The highest price target is between $265 and $270.The median price target sits between $185 and $190.The lowest price targets range between $120 and $140.

This suggests that the current price is near the bottom of the target range and well below the average to high consensus.

The Takeaway

With AMD’s earnings and guidance satisfactory, its stock sits at a critical juncture. Technically, AMD is at an optimal buy level, but momentum doesn’t seem to favor the bulls. Meanwhile, it’s uncertain whether AMD’s AI chip prospects are baked-in or underestimated. While you won’t be able to predict the outcome of AMD’s AI performance in the near term, you can see the technicals levels that might trigger a bounce or a bust. Momentum and price action are critical, so watch them closely in the next few days.

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
  • Market Research and Analysis – Part 1: Why Technical Analysis?
  • Stock Market Ends Week on Positive Note; Market Internals May Be Turning Bullish
  • DP Trading Room: Don’t Forget The MONTHLY CHARTS! Earnings Spotlight
  • Superior NYFANG+ performance leaves S&P 500 in the dust
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Rules-Based Money Management – Part 3: Relative Strength and Other Measures
next post
Iran is impotent at conventional warfare. Israel has proven it

You may also like

Disney Stock Options Strategy: A Detailed Guide to Boost Your...

October 18, 2024

Volatility Taunting Fresh Equity Buyers

September 23, 2023

Two Key Groups Take a Turn for the Worse

September 19, 2023

Sector Spotlight: Unleash The Power of Sector Analysis by Plotting...

November 8, 2023

Three Ways I Use RSI To Analyze Trends

September 2, 2023

HUGE NEWS! Our Most Important Site-Wide Product Release EVER +...

February 3, 2024

Energy Sector Roulette: Bullish Signals, Sluggish Projections

September 26, 2023

Top 5 StockCharts Features to Use Every Day, Grouped n’...

February 24, 2023

DP Trading Room: Does This Rally Have Legs?

January 6, 2025

Week Ahead: NIFTY Placed At Decisive Levels; Set To Begin...

May 27, 2023

    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

    • Nvidia results spark global chip rally

      May 30, 2025
    • Boeing to resume airplane deliveries to China next month, ramp up Max production, CEO says

      May 29, 2025
    • Nuclear Power Trio: OKLO, SMR, and CCJ in Focus

      May 29, 2025
    • Analyzing SIL, USO, and NVDA: Could These Bullish Patterns Trigger?

      May 29, 2025
    • E.l.f. Beauty to acquire Hailey Bieber skin care brand Rhode in up to $1 billion deal

      May 29, 2025

    Popular Posts

    • 1

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

      June 27, 2024 2,763 views
    • 2

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

      August 9, 2024 2,470 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,449 views
    • 4

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

      July 10, 2024 2,429 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,306 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,104)
    • Investing (538)
    • Stock (2,578)

    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

    • Nvidia results spark global chip rally

      May 30, 2025
    • Boeing to resume airplane deliveries to China next month, ramp...

      May 29, 2025
    • Nuclear Power Trio: OKLO, SMR, and CCJ in Focus

      May 29, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,104)
    • Investing (538)
    • Stock (2,578)

    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

    What Higher Rates Could Mean for...

    January 9, 2025

    1960s Analogue Sees Inversion in 2023

    December 8, 2023

    Energy Stocks in the Spotlight: A...

    September 6, 2023
    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