Shares of Advanced Micros Devices, Inc. are up by 15% since the fall in early May. Can AMD stock maintain this momentum heading into important product launches?
Shares of Sunnyvale, California-based AMD (NASDAQ:AMD) are in a recovery mode, up nearly 16% since the fall in early May. In comparison, the Nasdaq Composite (INDEX:COMPX) is up by 2.3% in the same timeframe. AMD stock closed the last trading session at a price of $11.93 a share, still trading 23% below its all-time high of $15.55 which was hit in late February. If recent news is anything to go by, AMD stock might be headed much higher, and here is why.
EPYC, A Key Driver
AMD is set to launch its EPYC branded server CPUs later today. And, given the positive early reviews, EPYC is widely speculated to make AMD relevant in the server CPU business, where Intel rules the roost with over 99% share. Forbes contributor Paul Teich summarized, "AMD’s early indicators are that Epyc's performance rocks." And this isn't a case of just one individual making a point. In an investor note in late February, longtime chip analyst Stacy Rasgon of Bernstein Research wrote "While we have too much history with Advanced Micro Devices to get behind the AMD bull case, it is apparent that the market is willing to believe. And if the market is right, especially on AMD's server offerings, we see few scenarios where this doesn't translate into problems for Intel given they currently own more than 99% of the marketplace."
In other words, AMD is no longer a just a 'participant' in the server market, the EPYC launch will make it a contender (for market share), a competitor to Intel. And as a colleague had pointed out in a recent post, EPYC could be a game changer for AMD, given that AMD has had nearly zero presence in the rapidly growing datacenter market.
AMD GPUs Are Selling Like Hot Cakes
In more recent news, channel checks indicate that AMD GPU's are being sold at the rate of knots. In fact, the momentum has been so strong that sales of the company's flagship RX 580 GPU in the first week of June have eclipsed the sales through the entire month of May. What this means is that the Dr. Lisa Su led company is also having a solid momentum in its GPU business.
With the EPYC launch to be followed by the launch of VEGA frontier GPUs later this month, AMD isn't slowing down anytime soon. All in all, AMD seems to be firing on all cylinders. However, the billion dollar question is, Will AMD stock follow the recent positive news? A look at the charts here is helpful.
AMD Technical Charts
AMD stock has recently bounced off the 20-day simple moving average (SMA), which currently lies at 11.52, 3.4% below the last closing price. Moreover, the stock rose above the 50-day moving average, at 11.82, during the last trading session. AMD stock price, at $11.93, will now face resistance from the 100-day SMA, which is 6% above the last closing price.
A continuation of the current bullish move should take the stock above the 100-day SMA, which will be yet another bullish crossover in a very short time. Also, AMD stock is setting up for a bullish SMA crossover, with the 20-day SMA closing in on the 50-day SMA from below. A crossover which sees the 20-day SMA cut the 50-day SMA will complete a 'Golden cross' pattern, which is considered a sign to buy a stock. Hence, investors should keep a close eye on the trading activity in the scrip over the next few days.
AMD stock is up 15% from its early May fall. AMD stock is gathering momentum ahead of the EPYC server chip launch today. Given the strong momentum in AMD GPU sales, AMD stock should more likely than not continue its current momentum. The Vega Frontier launch, which is only 7 days away, could help maintain the current momentum in the GPU space. In conclusion, AMD is up and running and the stock should follow, sooner or later.
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