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.
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.
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.
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.
The semiconductor industry is a rapidly growing business segment that currently thrives on the digital transformation wave. The demand for memory chips and other semiconductor products increased over the years,
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