Sign InAMD's Neutral Market Momentum Hints at Potential Bullish Stance Despite Caution
Summary
Advanced Micro Devices, Inc. (AMD) is trading at $116.43 with a neutral market momentum and a medium to long-term upward trend, but caution should be taken due to a high PE ratio and negative MACD, indicating potential market corrections, although the company has promising growth prospects in sectors like AI. (Analysis date: July 19, 2023)
Introduction
Advanced Micro Devices, Inc. (ticker: AMD) is trading on the NASDAQ. Its last closing price was $116.43 (on July 19, 2023), having experienced a change of -$1.50 (-1.27%).
Technical Analysis
The stock's Relative Strength Index (RSI14) is at 66, indicating neutral market momentum. Over the past 50 days, AMD has shown a rising trend with a moving average of $113.30, which is above the 200-day moving average of $85.48, signaling a medium to long term upward trend. It has touched a 52-week high of $132.83 and a low of $54.57. The stock's 3-month Moving Average Convergence Divergence (MACD) is negative at -3.27 suggesting the stock may have slightly overextended its bullish run.
Interpreting the volume activity, AMD traded 33.12 million shares on the last trading day, which was lower than the average daily volume over the past 50 days of 69.80 million shares. This reduced activity could mean less market interest in the stock recently.
Fundamental Analysis
The company has a high price to earnings ratio of 594.63, hinting at market expectations for future earnings growth. Earnings per share stand at $0.19. The firm has a colossal market capitalization of $181.94 billion, supported by 1.61 billion shares outstanding.
AMD's discounted cash flow comes in at $116.06, very close to the current price, evidencing fair pricing.
News Analysis & Future Prospects
Recent news suggests optimism towards AMD's growth potential and AI-related developments with self-driving cars, robotics, gaming, and machine learning. The focus on AMD's semiconductor and AI-driven chip business and their expected high growth rates through 2025 provides a positive outlook for the company.
The high target from analysts is $225 and the lowest is $65, with a consensus of $114.06, slightly below the current price. This suggests that market sentiment is mostly favorable.
Short Term Price Prediction
Considering the upward trend, the price for the next trading day (July 20, 2023) might experience slight bullish momentum and trade around its current price of $116.43.
Upcoming Week Price Prediction
In the upcoming week, considering both the bullish long-term trend and recent news sentiment, the stock might lean towards a bullish stance, but because of the high PE and the negative MACD, caution should be taken as it could lead to price pullbacks.
Final Evaluation
Based on the present analysis, AMD sits within the 'Hold' category. Despite the promising growth prospects and upward trend, the high PE ratio, coupled with the negative MACD, indicates potential market corrections. Investors should monitor the stock's performance closely. The impressive forecast related to growth sectors like AI places AMD in a favorable position for future growth. However, investors should consider their risk tolerance and investment strategy before making decisions.
