- AMD has retested a long-term resistance trendline and looks ready to rally.
- Traders should focus on the $119 level, which is nearly 12% higher than current price action.
- Citi analysts think AMD should benefit from higher notebooks sales in September.
- Investors wonder how quickly AMD’s MI300 accelerator chip will ramp up production and sales.
Advanced Micro Devices (AMD), the primary semiconductor competitor to Nvidia (NVDA), has seen its stock price set up for at least a 12% rally over the past week as shares have broken through a descending topline and then used it as support. The next target for bulls is $119, which at the current price near $106 would require an approximate 12% leap.
Equity futures are lower early Tuesday as Treasury yields gain for a second straight day. US Retail Sales for September arrived before the market open, showing that the US consumer is not giving up yet. Retails Sales rose 0.7% from August, more than twice the growth rate expected.
“Markets seem to be taking the geopolitical risk session by session at the moment, rather than having any strategic sense of where things are heading,” said Deutsche Bank’s Jim Reid in a client note. “It feels like we’re in a very dangerous and delicate holding pattern for now.”
AMD stock news: Higher demand for Intel-based notebooks is good news for AMD
AMD investors have something to cheer about at the moment as Citi has issued a client note that expects better quarterly results from Intel (INTC) on account of increased demand for notebooks and laptops. During the second quarter, AMD’s Client segment that sources much of its revenue from selling its CPUs and APUs to PC brands and assemblers saw revenue plunge 55% YoY.
Citi analyst Chris Danely called September notebook demand data from Intel “well above expectations,” adding that notebook sales had jumped 7% over August rather than the 2% decline he was expecting. This is good news for AMD as Intel and AMD products are used together in many different PC notebooks at both the higher and lower end of the retail scale.
In a separate client note, Danely and other Citi analysts said that AMD and Intel are the most talked about companies in the semiconductor space right now. While hedge funds have grown interested in Intel’s turnaround story based on its return to foundry manufacturing, AMD has garnered more interest from traders wondering how fast its MI300 accelerator chip will ramp up.
Citi expects the MI300 to bring in $1 billion in revenue in 2024, but many investors the investment bank spoke with were more skeptical that the rollout would work out as fast as planned. Others were concerned that AMD’s Xilinx acquisition was not producing the returns originally anticipated when CEO Lisa Su decided to buy the maker of field-programmable gate arrays (FPGA) two years ago.
Updated product line unveiled in AMD’s Q2 2023 presentation
Nasdaq FAQs
The Nasdaq is a stock exchange based in the US that started out life as an electronic stock quotation machine. At first, the Nasdaq only provided quotations for over-the-counter (OTC) stocks but later it became an exchange too. By 1991, the Nasdaq had grown to account for 46% of the entire US securities’ market. In 1998, it became the first stock exchange in the US to provide online trading. The Nasdaq also produces several indices, the most comprehensive of which is the Nasdaq Composite representing all 2,500-plus stocks on the Nasdaq, and the Nasdaq 100.
The Nasdaq 100 is a large-cap index made up of 100 non-financial companies from the Nasdaq stock exchange. Although it only includes a fraction of the thousands of stocks in the Nasdaq, it accounts for over 90% of the movement. The influence of each company on the index is market-cap weighted. The Nasdaq 100 includes companies with a significant focus on technology although it also encompasses companies from other industries and from outside the US. The average annual return of the Nasdaq 100 has been 17.23% since 1986.
There are a number of ways to trade the Nasdaq 100. Most retail brokers and spread betting platforms offer bets using Contracts for Difference (CFD). For longer-term investors, Exchange-Traded Funds (ETFs) trade like shares that mimic the movement of the index without the investor needing to buy all 100 constituent companies. An example ETF is the Invesco QQQ Trust (QQQ). Nasdaq 100 futures contracts allow traders to speculate on the future direction of the index. Options provide the right, but not the obligation, to buy or sell the Nasdaq 100 at a specific price (strike price) in the future.
Many different factors drive the Nasdaq 100 but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual company earnings reports. US and global macroeconomic data also contributes as it impacts on investor sentiment, which if positive drives gains. The level of interest rates, set by the Federal Reserve (Fed), also influences the Nasdaq 100 as it affects the cost of credit, on which many corporations are heavily reliant. As such the level of inflation can be a major driver too as well as other metrics which impact on the decisions of the Fed.
AMD stock forecast
Since May 30, a downward trending topline has been resistant to bullish attempts to return to the uptrending trajectory of 2023’s first five months. Besides a little blip in June, that topline has formed lower high after lower high.
After reaching the 200-day Simple Moving Average (SMA) in late September, the market is seeming to say: ‘enough is enough’. On October 10, AMD stock made a clear close above the trendline. AMD has since developed a retest last Friday, and made gains once again off that retest on Monday. This seems like a perfect setup for an attempt to rise back to the $119 to $133 supply zone.
Resistance at $109 experienced during the last few sessions will need to be overcome, but doing so will let bulls make a run for the $119 level, which hasn’t been reached since early August.
AMD daily chart
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