Sign InSummary
As of July 27, 2023, Advanced Micro Devices (AMD) experienced a slight increase in stock price, trading between its 52-week high and low, with technical indicators suggesting a possible exhaustion of the bullish trend; however, the surge in interest in AI stocks, recognition of AMD as a market dominator, and slight undervaluation imply a bullish outlook for the company, although potential investors should consider the relatively high P/E ratio.
Technical Analysis
Advanced Micro Devices, Inc. (AMD) closed at $111.10 per share on July 27, 2023, a 0.92% increase from the previous close. In terms of the daily price activity, the stock hit a low of $110.51 and a high of $115.08. The stock is situated somewhere between its 52-week high and low, which stand at $132.83 and $54.57, respectively. The 50-day moving average stands at $114.81, which is currently higher than the last close price. The 200-day average is $86.59, well below the last close. AMD's volume for the day was 70.22 million shares, slightly below the average volume of 70.78 million shares.
From a technical perspective, the RSI (Relative Strength Index) for AMD is currently at 46, indicating that the stock is neither oversold nor overbought. The MACD (Moving Average Convergence Divergence), a trends' momentum indicator, is exhibiting a slight suspicion of bearishness with a value of -0.26, suggesting that the bullish trend may be impending exhaustion.
Fundamental Analysis
AMD touts a market capitalization of $178.91 billion, with 1.61 billion shares currently outstanding. The company's earnings-per-share (EPS) stands at $0.18 and a price-to-earnings (PE) ratio of 617.22, a figure that's significantly high and could indicate that the stock is overvalued relative to earnings.
In recent news, there have been concerns about a projected 10% sales slowdown in 2023 for the semiconductor sector, affecting stocks like AMD as it essentially thrives in this sector. Moreover, AI stocks, including AMD, are experiencing a surge, triggering interest in AMD as an AI stock investment. Analysts have also cited AMD among the 'monster' stocks, implying that these companies dominate their respective markets.
Estimates and Analysts' targets
According to provided data, consensus estimate for AMD is $114.06, with a high estimate of $225 and a low estimate of $65. The discounted cash flow (DCF) analysis value is $114.18, slightly higher than the consensus estimate and the last traded price. It indicates that AMD may be slightly undervalued at its current market price.
Forecast
Given the close proximity of the last trading day price to the 50-day moving average, and a DCF that implies a marginally higher fair value, the expectation for AMD's performance on the next trading day, July 28, 2023, would lean towards a marginal increase, assuming no drastic news or event impacts the stock.
For the upcoming week, the longer-term view seems to be bullish. This conclusion is reached considering the surge of interest in AI stocks, the recognition of AMD as a market dominator, and existing undervaluation.
Evaluation
Despite concerns about a potential slowdown in the semiconductor sector, the strong interest in artificial intelligence technologies, combined with AMD's evident market dominance and slight undervaluation according to DCF, supports a bullish outlook for AMD. However, potential investors should consider the relatively high P/E ratio, which could suggest overvaluation.
Considering these factors, AMD should be classified as a "Hold" for investors already holding the stock, but those considering entering may want to wait for a more promising entry point due to the high P/E ratio. Current stockholders might use this period to monitor sector developments and AMD's response to potential sector slowdowns.
