Sign InAMD Faces Challenges Despite Strong Industry Position and Innovation
Summary
As of September 20, 2023, Advanced Micro Devices, Inc. (AMD) shows positive aspects in its fundamental analysis with strong innovation and market expansion, but its technical analysis indicates a bearish momentum and mixed signals, leading to a 'Hold' evaluation for the stock. (Date of Analysis: September 20, 2023)
Fundamental Analysis
Advanced Micro Devices, Inc. (AMD) is a prominent company listed on the NASDAQ with a significant market capitalization of $155.43 billion. It has a total of 1.62 billion shares outstanding. However, the company reported a negative earnings per share (EPS) of -0.04, leading to a notably negative price-to-earnings (P/E) ratio of -2405.
AMD’s recent development activities and introductions also play an integral part in the fundamental analysis. The company showcased its new processors which include the 4th generation EPYC processors, Genoa-X, and Bergamo, demonstrating AMD's leadership in the high-performance computing sector. The company also extended its portfolio with the new Kria K24 System-on-Module (SOM) and KD240 Drives Starter Kit. This continuous evolution indicates a strong commitment to innovation and market expansion.
However, AMD’s role in the competitive landscape cannot be glossed over. The company is competing directly with market leaders such as NVDA and ARM. Notably, renowned investor Cathie Wood’s questioning of ARM’s valuation may have affected the overall sector, resulting in a downward swing for AMD.
Based on expert opinions, an impressive 24 out of 28 analysts give AMD a ‘Buy’ rating, while 1 recommends ‘Strong Buy’, and 3 suggest 'Hold'. There were no 'Sell' or 'Strong Sell' recommendations. The consensus rating falls under “Buy”. The current discounted cash flow (DCF) stands at 99.28.
Technical Analysis
From a technical perspective, AMD displayed a dip of -1.25% in its last closing on September 20, 2023, standing at $100.34. The stock displayed high volatility during the day, with a low of $100.28 and a high of $103.94. The stock’s 52-week range sits between $54.57 (52-week low) and $132.83 (52-week high), indicating the stock's potential to generate higher returns.
Looking at volume, AMD recorded a volume of 51.74 million trades, which is below its average trade volume of 60.63 million, suggesting less active trading on the mentioned date.
In terms of moving averages, AMD’s 50-day moving average stands at $108.99, and its 200-day moving average rests at $95.08. The stock's current price is below the 50-day average but is above the 200-day average, presenting a mixed signal to the market. A Relative Strength Index (RSI) of 36 implies the stock is near oversold territory. Moreover, the stock's 3-month MACD stands at -0.73, suggesting a bearish momentum.
AMD currently has a resistance level at $101.8 but lacks a specified support level.
Predictions
Predicting the stock price for the next trading day on September 21, 2023, is highly challenging given the uncertainties in the stock market. However, considering the fundamental and technical analysis aspects, the price might witness a minor upward movement as it is in the near oversold zone and has lower resistance levels. The negative sentiment generated by Cathie Wood’s recent remarks about overvaluation in the sector might slightly suppress this upward trend.
As for the upcoming week, the stock may potentially trade within its recent range considering its ATR is 4.09. A positive movement might be influenced by the upcoming earnings announcement scheduled for October 30, 2023.
Evaluation
In conclusion, considering both the fundamental and technical analysis, AMD may be considered a 'Hold'. This is primarily due to its strong industry position, innovation records, and expected future performance, set against its recent negative momentum and the bearish sentiment in the sector influenced by Cathie Wood’s remarks. However, investors should regularly update their analysis as new information comes in.
