Sign InAMD Stock Analysis: Undervalued and Bullish Outlook Indicates Buy for Investors
Summary
Fundamental and technical analysis suggest that AMD's stock is a Buy for medium to long-term investors, with potential for growth given its strategic moves and strong presence in the data center chips market, although the negative EPS and PE and historical price volatility indicate higher risk levels, and thorough due diligence is advised for potential investors. (Analysis conducted on October 13, 2023)
Fundamental Analysis
Advanced Micro Devices, Inc. (AMD) last closed at $105.09 on Oct 13, 2023, which represented a 3.40% decrease (-$3.70) from the previous close. The significant decrease signals a generally unfavorable investor sentiment. Nevertheless, AMD's current price is well above the 200-day moving average of $97.69, suggesting a significant bullish trend from a long-term perspective.
The company has demonstrated a broad range in stock price over the past year, with a year's lowest at $55.71 and the highest at $132.83. This variability indicates AMD's vulnerability to the market's micro and macroeconomic impacts, making it a potentially high-risk stock.
The market cap rests at a strong $169.79 billion, which signifies its substantial size and presence within the market. The trading volume was around 52.80 million, lower than the average volume of 60.15 million, indicating a reduced investor interest on the particular day.
Looking into AMD's earning metrics, the firm has a negative EPS of -$0.04, and hence, a negative PE of -2627.25. This can be concerning as AMD is not currently generating enough profit per unit of equity. However, analysts have shown a strong buy-based consensus, which might be based on the company's strategic moves rather than current profitability.
On Oct 30, 2023, AMD is set to announce its earnings. This event may generate significant interest as investors evaluate the company's financial health and subsequent profitability potential.
AMD is set to further develop its AI software business, challenging Nvidia's AI processors' market dominance, which could improve the stock's future performance. Crucially, AMD's data center chips outperform Intel's in nearly all measures, displaying another significant strength.
Technical Analysis
AMD's RSI14 stands at 63, it indicates the stock is neither overbought nor oversold, residing in a neutral zone. The MACD (3-month) is currently at -1.35, indicating a bearish trend and potential issues with the asset's short-term momentum.
It is also worth noticing that the stock price has breached the 50-day moving average of $105.78, which could imply an emerging bearish trend. The ATR is at 3.65, indicating a moderate level of volatility, which traders need to factor into their decisions.
The support level is at $102.76, and resistance is at $106.59. Both these points serve as critical portfolio management indicators, especially for day and swing traders. If the stock price breaks above the resistance or falls below the support level, it could trigger a significant buying or selling movement, respectively.
The discounted cash flow (DCF) value for AMD stock stands at $108.17, implying the stock is currently undervalued and holds potential for price appreciation.
Target Estimates and Consensus
The consensus among forecasters designates a median target of $108, with the target consensus at $118.77. This suggests a bullish sentiment for AMD over the coming period. The target range remains broad, from a low of $65 to a high of $225, indicating diverse analyst perspectives concerning AMD's future growth.
Moreover, analysts show a "Buy" consensus for AMD, with 24 endorsing a "Buy," one indicating a "Strong Buy," and three advising to "Hold."
Conclusion
Considering the fundamental and technical observations, paired with recent strategic moves to enhance AI offerings and the solid place in the data center chips market, it is recommended to categorize AMD's stock as a "Buy" for medium to long-term investors. Its current undervaluation per DCF calculation gives it substantial room for growth, which, supplemented by the bullish analyst consensus, paints a promising picture for AMD's future. However, the negative EPS and PE, along with the stock's historical price volatility, should be taken into account, denoting a higher risk level. Therefore, thorough due diligence for potential investors is advised. The prediction for the next trading day (October 16, 2023) is that AMD will signal a trend towards recovering from the recent dip, with an outlook of appreciation within the next week being optimistic.
