Categories AlphaGraphs, Analysis, Technology

Why is AMD a better investment option after de-escalation of tariff war?

After ending the downtrend that lasted for several weeks, shares of Advanced Micro Devices (NASDAQ: AMD) finally bounced back a few days ago and have made steady gains since then. The positive momentum will likely continue through the next earnings release, which is due on October 29, and beyond that. Given the upbeat outlook, the stock might gather steam after the quarterly report.

The September-quarter is particularly important for the tech firm, considering its dismal performance in the June-quarter when earnings and revenues dropped in double digits, reflecting the faltering demand for microprocessors. It needs to be noted that the stock is yet to fully recover from July’s post-earnings sell-off.

Is AMD a Buy?

That justifies analysts’ consensus hold rating on the stock, with a price target that represents an 8% upside from the last closing price. The reasonable price makes the stock an investment option one wouldn’t want to miss.

Advanced Micro Devices (AMD) Q2 profit dips 70% but meets estimates
Advanced Micro Devices Q2 2019 earnings infographic

In the case of AMD, the market sentiment is closely linked to the conditions in the Chinese market, which accounts for about 30% of the company’s revenue. So, it makes sense to attribute the current upswing to the renewed hopes of a trade truce between Washington and Beijing. Earlier, the market was upbeat following reports of the government moving closer to signing an agreement with its Chinese counterpart to ease the tariff tension.

Strong Recovery

Currently, the stock is way above the all-time lows seen about four years ago. More importantly, the trend shows that the chipmaker is poised to outperform its close rivals, including Intel (INTC), leveraging the revamped product portfolio and favorable pricing. Recent innovations in the company’s processor line-up, especially the hugely popular Ryzen series and EPYC server chips, have made it a formidable competitor to Intel.

Related: AMD Q2 2019 Earnings Conference Call Transcript

Since some of AMD’s products are more competent than those offered by Intel, there is a chance of the former rising to the top in the future, specially in the wake of the ongoing preparations to launch a 16-core version by year-end. Moreover, AMD is steadily increasing its presence in the server segment, after expanding market share in the CPU market by a third since last year. The most likely scenario would be that rivals will be forced to revise down their prices to remain competent.

AMD shares, which closed the last session slightly above $30, traded higher during Wednesday’s session.

We’re on Apple News! Follow us to receive the latest stock market, earnings and financial news at your fingertips

Most Popular

Earnings calendar for the week of March 8

On the heels of lawmakers moving closer to passing the stimulus bill, inflations concerns gripped the market after Federal Reserve chief Jerome Powell at a meeting said the reopening would

Why Costco’s (COST) growth prospects might depend on beating costs, digital lag

Though the retail boom triggered by the pandemic was estimated to be short-lived initially, the shopping spree continued as customers stocked up on essential items, concerned about the persistent market

Gap (GPS) hopes to see a favorable recovery by the second half of 2021

Shares of Gap Inc. (NYSE: GPS) were up 5.8% in afternoon hours on Friday. The stock has gained 103% over the past 12 months. Gap reported mixed results for the

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top