Advanced Micro Devices, Inc (NASDAQ:AMD) stock looks poised for an uptick after largely disappointing August.
Sunnyvale, California-based semiconductor company, Advanced Micro Devices, Inc (NASDAQ:AMD) shares are slowly building some momentum heading into the month of September. AMD stock lost more than 5% of its value in August. However, AMD stock could have a better run this month. There seems to be a lot of good news surfacing for AMD shareholders. The Dr. Lisa Su led company officially launched its latest SKU for the Ryzen Threadripper lineup last week. There are also reports of AMD gaining market share over Intel (NASDAQ:INTC) in some of the major markets. With the influx of positive news, the technical outlook has also improved for the stock. All in all, things are looking much better for AMD stock now. AMD stock is poised for an uptick.
Why AMD stock underperformed in August?
Investors seem to have largely ignored the strong latest quarter earnings which the company reported. AMD stock had already gone up more than 20% in the lead up to the earnings in July. The expectations were sky high, a beat over Wall Street estimates and a double digit year over year revenue growth guidance ahead of expectations was also not enough. The not so good reviews of its Vega GPUs haven't gone well with the investors. The Vega GPUs also had high expectations of disrupting NVIDIA's (NASDAQ:NVDA) market dominance but they seem to have fallen short of that. External events also had a role to play on AMD shares. The Geopolitical tensions from North Korea also contributed to the stock's bad run. The bearish commentary from Barclays' Blayne Curtis also fueled the bearish sentiment around AMD stock in August.
Technical outlook looks encouraging.
The technical scenario for AMD stock has recently been boosted by multiple breakouts above key resistance levels and Moving Average Convergence Divergence (MACD) indicator turning bearish. The stock made bullish crossovers with its 20-day and 100-day Simple Moving Averages (SMA) last week. Now, AMD share price is all set to break above the crucial 50-day SMA. The stock's last close and the 50-day SMA presently stand equal. This is a crucial resistance level, as one can see in the chart below that AMD stock has failed to break above the 50-day SMA in August. The stock came close to testing the 50-day SMA only to fall back. Previously also, the 50-day SMA has been a strong resistance level and a break above it generally has resulted in the stock heading higher. The break above this resistance level could set the stock for a new rally. Further, MACD indicator is also trending up and could soon make another bullish crossover, this time with the center line. Overall, AMD stock's technical outlook looks encouraging for an uptick.
More positive news for AMD recently.
Recent reports suggest AMD has reached its biggest market share in over a decade. The report states that the company has surpassed Intel in terms of both units sold and revenue at the Germany’s largest online retailer (Newegg). Ryzen 5 and Threadripper CPU seems to be the driving force behind this achievement. Particularly, Threadripper CPUs have done very well. Further, AMD looks to make life more difficult for the chipzilla as it has announced that it will provide NVMe RAID for Threadripper after September 25th for free. A recent report believes that this would result in Intel losing the only advantage it had over AMD’s Threadripper. This feature should immensely help the sale of Threadripper CPUs which are already gaining a lot of traction. The Ryzen Threadripper line up is still the cheapest HEDT CPU on the market and is likely mount more pressure on Intel in the CPU segment. All in all, things still look a lot more positive than negative for AMD stock heading into September.
While technicals fall in place for AMD, the influx of positive news is a big boost to investor sentiment. The current interest in cryptocurrency mining should continue to be another tailwind for the stock heading into its Q3 earnings. Further, still, a majority of the analyst community is still bullish on the chipmaker. In a recent note to his clients, Mark Lipacis of Jefferies has named AMD among his top semiconductor ideas for 2018. His commentary stressed on positive market reaction to the company's EPYC server CPUs. Lipacis has a price target of $19 for AMD stock. Over all, things are changing for the better for AMD. AMD stock is bouncing Back, looks set to head higher.
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