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An EPYC Bounce Underway in Advanced Micro Devices, Inc. (NASDAQ:AMD)

Advanced Micro Devices, Inc. (NASDAQ:AMD) has been on the mend after the stock found support right in the zone we discussed in our last two articles. In our last piece on the stock (see “Is the Tone Shifting for Advanced Micro Devices, Inc. (NASDAQ:AMD)?”), we made the case to close out last month that an aggressive bounce could be in progress. We have seen about 15% on the upside since that post as the company has taken more control over its own narrative again.

And we will get to that. But first, to rehash the context, it’s important to note that the last leg of selling down to test and barely break the 200-day simple moving average happened after we saw some strong chip cycle indications from INTC and XLNX, and conference call commentary from INTC and MSFT that ran contrary to the idea of a durable CPU shortage (one of the key bear themes for AMD).

Advanced Micro Devices, Inc. (NASDAQ:AMD) shares then found what we might call “overshooting support” at a confluence of technical factors including the 200-day simple moving average, the critical breakout trigger level from the stock’s late July breakout, and the 61.8% Fibonacci retracement level of the stock’s low-high range for 2018. That zone is roughly $16.90 – $18.30. The stock bottomed on a closing basis right at $16.85, basically dead at the bottom end of that range.

Now, as noted above, we are starting to see strong contributions from its EPYC catalyst. The company just announced, along with Amazon Web Services, the immediate availability of the first AMD EPYCTM processor-based instances on Amazon Elastic Compute Cloud (EC2).

According to its Tuesday release, “Part of the most popular AWS instance families, the new AMD EPYC™ processor powered offerings feature industry leading core density and memory bandwidth. This results in exceptional performance per dollar for general purpose and memory optimized workloads. The cost savings are driven by the core density of AMD EPYC processors that offer M5 and T3 instance customers a balance of compute, memory, and networking resources for web and application servers, backend servers for enterprise applications, and test/development environments with seamless application migration. For R5 instance customers, the memory bandwidth advantage of AMD EPYC processors is ideal for in-memory processing, data mining, and dynamic data processing.”

“The availability of multiple AMD EPYC processor-powered instances on Amazon EC2 instances marks a significant milestone in the growing adoption of our high-performance CPUs with cloud service providers,” said Forrest Norrod, senior vice president and general manager, Datacenter and Embedded Solutions Business Group, AMD. “The powerful combination of cores, memory bandwidth and I/O on AMD EPYC processors create a highly differentiated solution that can offer lower TCO for our customers and lower prices for the end-user. Working with AWS, the number one provider in cloud services, has been amazing for the AMD team and we are excited to see the new instances come online today for their customers.”

This may help to create a context capable of reigniting some excitement rather than simply healing the technical scar on the chart. However, the broad market forces are strong right now, with high intra-index correlation on any bearish movement. No stock trades in a vacuum.

 

Top-Down View

Advanced Micro Devices, Inc. (NASDAQ:AMD) bills itself as a semiconductor company worldwide. It operates in two segments, Computing and Graphics; and Enterprise, Embedded and Semi-Custom.

The company’s products include x86 microprocessors as an accelerated processing unit (APU), chipsets, discrete and integrated graphics processing units (GPUs), and professional GPUs; and server and embedded processors, and semi-custom System-on-Chip (SoC) products and technology for game consoles.

It provides x86 microprocessors for desktop PCs under the AMD Ryzen, AMD Ryzen Pro, Threadripper, AMD A-Series, AMD E-Series, AMD FX CPU, AMD Athlon CPU and APU, AMD Sempron APU and CPU, and AMD Pro A-Series APU brands; microprocessors for notebook and 2-in-1s under the AMD Ryzen processors with Radeon Vega GPUs, AMD A-Series, AMD E-Series, AMD C-Series, AMD Z-Series, AMD FX APU, AMD Phenom, AMD Athlon CPU and APU, AMD Turion, and AMD Sempron APU and CPU brands; and microprocessors for servers under the AMD EPYC and AMD Opteron brands. It also offers chipsets under the AMD brand; discrete GPUs for desktop and notebook PCs under the AMD Radeon and AMD Embedded Radeon brand; professional graphic products under the AMD Radeon Pro and AMD FirePro brands; and customer-specific solutions based on AMD’s CPU, GPU, and multi-media technologies.

In addition, it provides embedded processor solutions for interactive digital signage, casino gaming, and medical imaging under the AMD Opteron, AMD Athlon, AMD Sempron, AMD Geode, AMD R-Series, G-Series, and AMD Embedded Radeon brands; consumer graphics under the AMD Radeon brand; and semi-custom SoC products.

Advanced Micro Devices, Inc. (NASDAQ:AMD) pulled in sales of $1.7B in its last reported quarterly financials, representing top line growth of 0.6%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.1B against $1.9B, respectively).

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