AMD Stock: Is It A Buy Right Now? Here’s What Advanced Micro Devices Earnings, Stock Chart Show
Advanced Micro Devices (AMD) stock surged to an all-time high late last year. But with a pullback in the chipmaker’s shares, some investors may be wondering: Is AMD stock a buy right now?
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AMD has staged an amazing turnaround over the past six years, fueled by new products and improved profitability. And AMD stock has climbed as a result.
AMD competes with Intel (INTC) in making central processing units, or CPUs, for personal computers and servers. It also rivals Nvidia (NVDA) in the market for graphics processing units, or GPUs, for PCs, gaming consoles and data centers.
Founded in May 1969, AMD went public in September 1972. AMD shifted to a fabless semiconductor business in March 2009 by spinning off its factories as GlobalFoundries (GFS).
Chief Executive Lisa Su Making A Difference
Current Chief Executive Lisa Su took the reins in October 2014. She shepherded the Santa Clara, Calif.-based company into a new era with its Ryzen PC processors and Epyc server chips in 2017.
Under her supervision, AMD jumped ahead of Intel in making CPUs at smaller node sizes, giving its products an edge in speed and performance. AMD is making chips at 6-nanometer scale, while Intel has struggled to make chips at 10-nanometer scale. AMD is now developing chips at 5-nanometer scale. Circuit widths on chips are measured in nanometers, which are one-billionth of a meter.
The situation has helped AMD take market share from Intel in PCs and servers. Those gains have buoyed AMD stock.
Chip foundry Taiwan Semiconductor Manufacturing (TSM) produces AMD’s chips.
Su also is responsible for a potentially transformative acquisition. On Feb. 14, AMD completed its acquisition of Xilinx in an all-stock deal worth $49 billion. AMD hopes to expand its presence in the data center market with specialty chips from Xilinx. AMD stock rose on the news.
On April 4, AMD announced a deal to buy distributed computing startup Pensando for $1.9 billion to further bolster its data center capabilities. AMD stock popped 2.2% on the news.
Intel Losing Market Share To AMD
In the fourth quarter, AMD took market share from Intel in CPUs for servers and notebook PCs, according to Mercury Research. But it lost ground in desktop PCs as it prioritized higher-margin products amid supply constraints.
AMD’s unit share of the lucrative server CPU market rose to 10.7% in the fourth quarter, up from 7.1% in the year-earlier period.
AMD’s share of notebook PC processor sales was 21.6% in the December quarter, up from 19% a year earlier.
However, AMD’s unit share of desktop PC processor sales was 16.2% in the fourth quarter, vs. 19.3% in the same quarter a year earlier.
Combining desktop and notebook CPUs, AMD’s unit share of the total PC market was 19.9% in the December quarter, up from 19.1%.
Advanced Micro Devices News: Share Buybacks
Late on Feb. 24, AMD announced a new $8 billion share repurchase program. The new authorization is in addition to the $4 billion stock buyback plan announced in May 2021, under which the company had repurchased about $3 billion of AMD stock. Investors applauded the news, sending AMD stock up 3.8% in the next trading session.
At the CES 2022 consumer electronics show on Jan. 4, AMD introduced its latest central processors and graphics processors for notebook PCs, with a special emphasis on gaming applications. It debuted its Ryzen 6000 series mobile processors and new Radeon graphics processors.
AMD also previewed its next-generation processors, the Ryzen 7000 series. Those chips will use 5-nanometer process technology and are set for availability in the second half of 2022. But AMD stock dropped 3.9% amid a rough day for tech stocks.
On Nov. 8, AMD announced new specialized processors for different data-center workloads. It also added Meta Platforms (FB), the parent company of Facebook, as a customer for its server chips. AMD stock jumped 10.1% on the news.
AMD Fundamental Analysis
Late on Feb. 1, AMD reported better-than-expected fourth-quarter results and guided higher for the current quarter and full year. AMD stock leapt 5.1% in the next trading session.
AMD earned an adjusted 92 cents a share on sales of $4.83 billion in the December quarter. Analysts had expected AMD earnings of 76 cents a share on sales of $4.52 billion, according to FactSet. On a year-over-year basis, AMD earnings soared 77% while sales climbed 49%.
For the current quarter, AMD forecast sales of $5 billion, vs. analyst estimates for $4.35 billion. Its guidance would translate to sales growth of 45% year over year in the first quarter.
The next potential catalyst for AMD stock could be the company’s first-quarter earnings report. AMD plans to announce its results for the March quarter on May 3.
AMD Stock Technical Analysis
AMD stock sank to a nearly four-decade low of 1.61 a share in July 2015 before starting its epic recovery.
On Oct. 18, AMD stock broke out of a double-bottom base at a buy point of 114.59, according to IBD MarketSmith charts. It surged to a record high 164.46 on Nov. 30 before retreating. AMD stock tumbled during the stock market correction earlier this year and hasn’t recovered. It ended the regular session April 14 at 93.06.
AMD stock has a poor IBD Relative Strength Rating of 38 out of 99. The Relative Strength Rating shows how a stock’s price performance stacks up against all other stocks over the last 52 weeks. The best growth stocks typically have RS Ratings of at least 80.
AMD stock carries a so-so IBD Composite Rating of 77 out of 99. IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Is AMD Stock A Buy Right Now?
AMD stock is not a buy right now. It needs to form a new base in the right market conditions before setting a potential buy point. Check out IBD’s Big Picture column for the current market direction.
In a negative sign, AMD stock is trading well below its 50-day moving average line as well as its 200-day line.
The IBD Stock Checkup tool ranks AMD eighth among 30 stocks in IBD’s fabless semiconductor industry group. The fabless chipmaker group ranks No. 124 out of 197 industry groups that IBD tracks. IBD trading guidelines recommend focusing on top-rated stocks in leading industry groups.
To find the best stocks to buy or watch, check out IBD Stock Lists as well as IBD’s Leaderboard, MarketSmith and SwingTrader platforms.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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