Notably, the short interest in AMD is currently around 11%, which is high. Therefore, this price zone is important for AMD to break through. In other words, AMD has failed to breakthrough twice over a 20-year period at this region, and what followed these failed breakouts was two drawdowns greater than 90%. Also, the severity of the correction from the price region usually dictates the importance of the region as well. Regarding resistance and supports, the longer the region has held the more important it becomes. Price is approaching a resistance zone that AMD has failed to break through twice over the prior 2 decades – once in the year 2000 and then again in 2006. In the technical analysis below, we attempt to reveal just how stretched AMD is, to make the case that now might be the time to take profits, or wait for confirmation if you are looking for an entry. The main challenge with AMD’s current share price is market exuberance over the company’s rebound from the lowered guidance in July. This helps support the bull case that AMD’s earnings are growing even while experiencing flattened revenue, and the company has forward-looking potential. Intel, on the other hand, saw non-GAAP margins fall YoY. However, over this past year, AMD’s non-GAAP margins have expanded even as revenue declined. The company’s trailing EBITDA margin of 8.35% is below that of peers mentioned above. YTD growth is around 20%, which is similar to Broadcom.ĪMD’s fundamental story lies within the company’s margins, which historically, have been very low, and are impacted by average sales price (ASP), cost per unit and volume. (Hence the popularity of the stock and cyclical nature of semiconductors). Meanwhile, AMD’s YoY revenue growth same quarter is at 8.95% and will be 52% growth YoY same-quarter Q4, if the company comes in at the $2.15 billion. The current PE ratio for the AMD is 206, nearly 5x higher than Broadcom at 45, nearly 4x higher than Nvidia’s at 55 and an astonishing 8x higher than Taiwan’s current PE ratio at 25. Historically, the S&P 500 has an average forward PE ratio of 15. It has a one-year forward PE ratio of 36, compared to Nvidia’s 30, Taiwan Semiconductor at 20, and Broadcom at 12. The issue is that the recent AMD share price surge and subsequent valuation multiples see it as a growth company. This will be slightly flat from the $6.47 billion that was generated a year ago. Factoring the past three quarters means that the company will likely generate $6.4 to $6.7 billion in revenue this year. Management guided fourth-quarter revenue of $2.05 billion to $2.15 billion, while analysts had forecast revenue of $2.15 billion. Revenue missed by $1 million on an expected $1.81 billion while the company met EPS forecasts of $0.18 EPS. In the most-recent quarter, AMD reported revenue of $1.8 billion, which is the company’s highest quarterly sales in more than a decade. Higher PC and graphics chips helped drive the most recent quarter’s performance, yet AMD’s strategy in the CPU-powered cloud-data center segment as the company takes on juggernaut- Intel is especially promising. Since 2017, Intel has lost 10% of its PC CPU market share and 5% server market share to AMD. The main justification for the surge in AMD’s stock price is that the company is successfully taking market share from Intel – and to some extent, Nvidia.
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