Advanced Micro Devices, Inc. (NASDAQ:AMD) is one we signaled as a buying opportunity between $16.90 – $18.30 in an article posted on October 26. That was at a strong confluence of support levels and mixed well with a fundamental argument that both the CPU shortage and chip cycle concerns could bottom out in terms of sentiment once semiconductor industry Q3 earnings and guidance had cleared. So far, that is turning out to be a prescient call. The stock has advanced as much as 40% off its late October pivot low. That’s a nice move and a good sign. But the more important action is taking place during this latest pullback: The stock is powerfully outperforming the broad market on a swing-for-swing basis.
Advanced Micro Devices, Inc. (NASDAQ:AMD) shares remain over 18% above their October lows. Large-cap technology stocks, as exemplified by both the QQQ and XLK ETFs, are now well below that same swing pivot. This is the type of relative strength that often marks transitions of capital. One other factor that points to the resilience currently on display for AMD is the fact that it has shown this clear relative strength despite Bitcoin crashing again on a new and defining leg of its bear market.
As you may recall, much of the problem for AMD investors so far in 2018 is the notion that AMD shares had been bid upon a speculative bubble of enthusiasm around bitcoin mining. While this has not led to a correlation with BTC, itself, it has led to a correlation with fervor around the BTC mining industry. These are not the same objects of reference. BTC mining fervor continued long after the top in BTC. Hope springs eternal. However, one must assume that this latest crash represents a capitulation and surrender by even the more determined and dogged of BTC bulls that the crypto mining boom isn’t and maybe never was.
At the end of the day, the notion that AMD shares are in a technical recovery leg rather than a pause before a dive to new lows should continue to be embraced given the stock’s resilience and relative strength in recent action. Naturally, it is ultimately correlated to the large-cap tech space, and a sharp drop in FANG stocks and other speculative names would intensify this test and could lead to a breach of the October lows in AMD. But if this relative strength dynamic remains intact during such a process, it might ultimately be another strong opportunity.
View From Above
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 graphics 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).