AMD’s Chart Shows Potential Life Signs After Nine Tough MonthsIs it finally time semiconductor giant Advanced Micro Devices NASDAQ:AMD to show some life after a more than nine-month-long beatdown? Let's investigate what the stock’s technical and fundamental analysis says.
AMD’s Fundamental Analysis
Advanced Micro Devices has lost better than 40% since hitting a $227.30 all-time intraday high on March 8.
In just in the past two weeks or so, three analysts with five-star rating from TipRanks have reduced their AMD target prices while either reiterating "Hold" ratings or downgrading the stock.
Joseph Moore of Morgan Stanley, William Stein of Truist Financial and Vivek Arya of Bank of America took their targets for AMD down from $168.73 on average to a $152.67 mean.
The stock closed Friday at $125.24, so even that reduced average target would require AMD to climb more than 21% to hit it. Some "Hold" that would be.
Meanwhile, two other five-star analysts -- Gus Richard of Northland Securities and Thomas O'Malley of Barclays -- have recently either reiterated or initiated "Buy" ratings on AMD with target prices in the $170s.
AMD’s stock has struggled as the company chased Nvidia NASDAQ:NVDA in the generative AI space without really capturing much more market share.
Broadcom NASDAQ:AVGO and Marvell Technology NASDAQ:MRVL are starting to crowd into that space as well, not to mention the hyper-scalers like Apple that have started to design their own chips as a means toward saving capital.
Still, there are the gaming and PC sectors -- spaces where AMD has practically eaten the lunch of rival chipmaker Intel NASDAQ:INTC .
As for earnings, AMD will report Q4 results in about a month's time. The Street is looking for about $1.09 in adjusted earnings per share on $7.5 billion of revenue.
If that holds true, the results would compare favorably to AMD’s year-ago $0.77 in adjusted EPS, while reflecting 22% year-over-year sales growth. That would also represent the fifth consecutive quarter of 20%+ year-over-year revenue growth.
AMD’s Technical Analysis
AMD’s chart as of Tuesday looks like it’s starting to tell us something potentially positive after months of problems -- the possibility of a so-called “double-bottom reversal pattern” completing its development:
Bottom No. 1 formed in early August at $121.83, while AMD might have just put in Bottom No. 2 a few days ago at $117.90.
The apex of the rally in between these two bottoms (which would form a pivot point in this pattern) occurred in early October at $174. All of that is potentially bullish.
Looking at AMD’s other technical indicators, readers will see that the stock’s Relative Strength Index (the gray line at top in the above chart) is still weak, but is rallying out of a technically oversold condition.
Meanwhile, the stock’s daily Moving Average Convergence Divergence indicator (or “MACD,” denoted with the black and gold lines and blue bars at the chart’s bottom) appears to be trying to force a more bullish set-up.
Mind you, there's still plenty that could prevent any real bounce-back for AMD.
For instance, the histogram for the stock 9-day Exponential Moving Average (or “EMA,” marked with blue bars at the chart’s bottom) has improved, but is still negative.
However, the 12-day EMA (marked with a black line) has caught up to the 26-day EMA (the gold line) and could rise above it. That would historically represent a positive development.
On the other hand, AMD’s 21-day EMA (the green line above), 50-day SMA (the blue line) and 200-day Simple Moving Average (or “SMA,” marked with a red line) are all above AMD’s Friday close.
That historically means there will be algorithmic resistance on the way up for AMD, and that the stock is still technically in a downtrend.
That said, those are the lines that AMD will have to retake to pull swing traders and portfolio managers back from a risk-off sentiment toward the stock.
Time will tell, but I personally have a little more hope for AMD than I did a week or two ago.
(At the time of writing this column, Moomoo Markets Commentator Stephen “Sarge” Guilfoyle was long AMD.)
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