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Advanced Micro Devices Inc (NASDAQ:AMD) is set to report first-quarter earnings Tuesday. Wall Street expects 61 cents in EPS and $5.5 billion in revenues when the company reports after market hours.
AMD has been a standout performer in the stock market, soaring 83% over the past year. Artificial intelligence (AI) applications fueled this growth.
However, the year-to-date (YTD) performance of the stock, up 6.95%, indicates a more modest growth trajectory in 2024.
Also Read: What’s Going On With Advanced Micro Devices Stock?
AMD has faced challenges in aligning its fundamentals with market expectations. Earnings declined from 2021 to 2023, and analyst projections for 2024 have also been revised downward. This discrepancy between market sentiment and fundamental performance highlights the complexity of the current market landscape, where investor expectations often outpace actual financial results.
The company’s core business is still grappling with challenges in the frail PC market, which could impact its near-term performance. However, there may be upside potential from AMD’s AI endeavors, particularly its MI300 AI accelerator, which could drive growth in the future.
One of AMD’s key strengths lies in its technological innovations, particularly in its Zen 4 architecture and the MI300A chip. These advancements have not only bolstered AMD’s competitive position but also positioned it well for the intensifying chip warfare among tech giants. The company’s strategic focus on AI and large language models further underscores its commitment to staying at the forefront of technological innovation.
Despite these strengths, AMD faces stiff competition, particularly from Nvidia Corp (NASDAQ:NVDA), which has a robust ecosystem and a performance edge in the market.
From a technical analysis standpoint, AMD’s stock is currently experiencing a strongly bearish trend.
AMD’s share price is below its 20, and 50-day simple moving averages, reflective of bearishness. However, there is buying pressure, and the stock is above its five-day moving average, indicating a potential bullish movement in the future.
The Moving Average Convergence Divergence (MACD) indicator is -6.68, suggesting bearishness. However, the MACD line appears to be crossing over the signal line – indicating a potential reversal in trend.
The Relative Strength Index (RSI) is in the Neutral territory at 44.54, however, heading upwards towards the overbought zone past viz. past 70.
Bollinger Bands add to the bearishness around the stock, with AMD stock trading in the lower band. However, Just like the MACD, the stock price appears to be on the verge of breaking out to the upper bullish band, where it could signal positive market momentum towards the stock.
Overall, the technical setup for AMD stock seems largely bearish. However, there are green shoots of buying pressure, potential MACD and Bollinger Band crossovers, as AMD heads towards announcing its Q1 earnings.
Fundamentally, AMD’s stock has shown remarkable growth driven by the surge in AI and its technological innovations.
Despite facing challenges in aligning its fundamentals with market expectations, the company’s strong moat and strategic focus on AI and large language models position it well for future growth.
It remains to be seen whether AMD’s Q1 earnings will reverse its stock’s technical bearish trend.
Read Next: AMD and Samsung Partner To Boos MI350 Chip Capabilities with Advanced Memory Tech
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