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On August 21, 2023, Advanced Micro Devices (AMD) closed at $108.22 with a positive shift of 2.63%, and while the stock is nearing oversold territory, the bearish market indicated by MACD and the high PE ratio suggest it may be a better hold rather than a buy.
Technical Analysis of Advanced Micro Devices, Inc. (AMD)
For the trading day that ended on August 21, 2023, AMD closed at $108.22. This figure represents a positive shift of 2.77 (2.63%) from the previous trading session. During the day, the stock oscillated between the low and the high of $105.67 and $108.54, respectively. The trading volume for the day stood at 47.67 million shares, below the average volume of 69.30 million shares.
Advanced Micro Devices' (AMD) Relative Strength Index (RSI) stands at 38, which indicates the stock is nearing oversold territory and could potentially rebound in the coming sessions. The Moving Average Convergence Divergence (MACD), a trend-following momentum indicator, is negative (-0.91), signaling a bearish market for AMD.
AMD's 50-day moving average stands at $114.10, while the 200-day moving average is $91.07. The price is currently below the 50-day moving average, suggesting short-term bearishness.
The stock has a support level at $108.12 and resistance at $109.35. Breaking these levels in the respective direction will indicate a potential trend change.
Fundamental Analysis of Advanced Micro Devices, Inc. (AMD)
AMD's market capitalization stands at $174.27 billion, with 1.61 billion shares outstanding. The Price to Earnings (PE) ratio is at a hefty 601.22. This could be considered overvalued -- especially in comparison to the industry's average PE. Furthermore, its Earnings per Share (EPS) is $0.18.
Analysts' future price targets range from a low of $65 to a high of $225, with a median target at $108 and consensus target at $118.77. There's a strong consensus toward 'Buy,' with 24 recommendations for 'Buy,' 3 for 'Hold,' and none recommending 'Sell.' The Discounted Cash Flow (DCF) analysis projects a valuation of AMD at $111.30.
AMD's earnings announcement is due on October 30, 2023, and any substantial variation in actual EPS, whether positive or negative, from estimated EPS will likely affect the stock's price.
Several recent news about AMD provides both positive and negative insights. While the firm has extended its partnership with Amazon AWS, boosting EC2 instances' functioning, it also faces negative sentiments regarding overvaluations despite a 65% price increase in 2023 due to AI and Big Tech enthusiasm.
Stock Performance Prediction
Considering that next trading day is August 22, 2023, AMD might see a slight rebound as the RSI hints towards the stock being in the oversold region. In the upcoming weeks, the stock could potentially hover around the lower end of the analysts’ target price range, considering the current sentiment, the MACD trend, and the fundamental analysis.
Stock Evaluation: Hold
Given AMD's technical and fundamental metrics along with analysts' consensus and DCF valuation, the stock can be classified as a 'Hold.'
The stock is being somewhat oversold judging by the RSI, indicating a potential rebound. However, its high PE ratio might make it unattractive from a value perspective. The market sentiment seems to be bouncing between optimistic turns (improved relations with Amazon AWS, encouraging AI developments) and cautionary tales (overvaluation concerns, interest rate worries).
Investors should keep a close watch on the stock's technical indicators and how the market's sentiment evolves towards AMD's prospects in the short term.
