Why the Profit on Advanced Micro Devices Stock?
Advanced Micro Devices, Inc. (NASDAQ AMD) stock has
declined for the past year, on fears that the semiconductor market is heading
for a glut, mainly as fears of a global slowdown weigh on sentiment after years
Lingering logistic issues and declining demand are marring the optimal
productivity of the semiconductor industry. The semiconductor industry is
struggling with increased government restrictions. Moreover, the current
inflationary pressures will likely hurt consumer spending, further dampening
the overall demand.
Given the near-term headwinds, semiconductor stock Advanced Micro
Devices might be best avoided now as a stock trade. However, a put option seems
to be the way to go.
In addition to the potential glut, that is expected to come in 2023, AMD
is now witnessing the price fall for some of its chips. While the fall in price
is currently primarily segregated to the secondary market, the price decline is
now starting to affect the primary sales as well. Analysts are currently torn
between whether there will be a chip shortage, or a glut going into 2023, and
the mixed news is clearly leading to a negative outlook.
This has been a bad year for semiconductor stocks following two years of
healthy growth when supply was tight and demand was booming. That explains why
the PHLX Semiconductor Sector index has lost 35% of its value in 2022.
Reports about high levels of semiconductor inventories and weakening
demand have sent shockwaves through this once-high-performing sector. Not
surprisingly, shares of Advanced Micro Devices have borne the brunt of the
broader semiconductor industry weakness.
The U.S. government's latest sanctions on sales of artificial
intelligence (AI) chips to China have further dented investor confidence in the
stock despite AMD's solid results and sunny outlook.
has declined 26.5% over the past year and 46.5% year-to-date to close the last
trading session at $74.48.
The Profits Explained.....
Entered the Advanced Micro Devices stock trade on Thursday, September 22, 2022 for $2.93 at
start of trading.
Exited the trade Thursday, September 22 at 2:28pm for
$5.30, a potential profit of 81%.
Don’t miss out on further trades – become a member today!
Advanced Micro Devices.....
Advanced Micro Devices, Inc. engages in the
provision of semiconductor businesses.
It operates through the following segments:
Computing & Graphics, and Enterprise, Embedded and Semi-Custom. The
Computing and Graphics segment includes desktop and notebook processors and
chipsets, discrete and integrated graphics processing units, data center and
professional GPUs and development services. The Enterprise, Embedded and
Semi-Custom segment includes server and embedded processors, semi-custom
System-on-Chip products, development services and technology for game consoles.
The company was founded by W. J. Sanders III
on May 1, 1969 and is headquartered in Santa Clara, CA.
More Reasons Why The Initial Weekly Options Put Trade
on Advanced Micro Devices Stock.....
Also, read the details in the previous trade – ZOOM –
under the heading “Market Negativity” – which also applies here.
The Federal Reserve raised its target fed funds rate by 0.75% on
Wednesday to a new range of between 3% and 3.25%, its third 0.75% rate hike in
four months. The Fed said it will continue with its previously announced plan
to let Treasury securities and agency debt and agency mortgage-backed
securities roll off its balance sheet on a monthly basis.
“Inflation remains elevated, reflecting supply and demand imbalances
related to the pandemic, higher food and energy prices, and broader price
pressures,” the Fed said in a statement.
"Chairman Powell reiterated the Fed’s hawkish stance with another
aggressive rate hike and set the tone for markets to prepare for a tougher
economic situation ahead as the battle against inflation endures," Charlie
Ripley, Senior Investment Strategist for Allianz Investment Management said.
Street expects AMD’s revenue to be $6.71 billion for the third quarter
ending September. The consensus EPS is estimated to be $1.05 for the same
second quarter ended June 25, 2022, AMD’s net revenue came in at $6.55 billion,
up 70.1% year-over-year. However, its operating income came in at $526 million,
down 36.7% year-over-year. Its net income came in at $447 million, down 37% year-over-year,
while its EPS came in at $0.27, down 53.4% year-over-year.
In terms of its forward EV/S, AMD’s 4.61x is 77.8% higher than the
industry average of 2.59x. Its forward EV/EBITDA of 13.18x is 8.2% higher than
the industry average of 12.18x. Also, its forward P/S of 4.71x is 86.3% higher
than the industry average of 2.53x. In addition, its forward Price/Cash Flow of
18.56x is 9.2% higher than the industry average of 17.00x.
Earlier this month, it was reported that AMD had received instructions
from U.S. Officials to stop exporting its artificial intelligence chips to
China. Although the company said it does not believe the new rules would have a
material impact on its business, the restriction might impact its overall
Furthermore, the global semiconductor revenue is expected to decline by
7.4% in 2022 compared to a 26.3% increase last year. With slowing consumer
demand, this revenue decline will likely continue through 2023, with
semiconductor revenues projected to decline 2.5% in the year.
AMD’s operating expenses increased 150.8% year-over-year to $2.51
billion for the fiscal second quarter ended June 25. Its operating income
amounted to $526 million, showing a decline of 36.7% year-over-year, while its
net income declined 37% year-over-year to $447 million. The company’s EPS
decreased 53.4% year-over-year to $0.27 for the same period.
is expected to slowly come through in 2023 and 2024, which may finally ease up
the current shortages, as plants across the United States, and Asia (Japan),
open up. But issues that continue to hamper supply in the short term as
material shortages, stemming from supply chain disruptions in China, and water
shortages continue to affect the market.
prolonged economic conditions are starting to impact demand evidenced by
slowing orders and rising cancellations.
eventually return to normal, but demand is more subjective and temperamental.
It’s not unexpected during a monetary tightening period led by rising interest
rates. However, when a best-in-class leader cautions that demand is being
adversely affected, the markets will react quickly.
already-fractured U.S.-China relationship could worsen as the U.S. rolls out
more restrictions aimed at curbing China’s access to technology and
investments, injecting an additional source of volatility for global investors.
President Joe Biden signed an executive order to better scrutinize foreign
investments into the U.S. involving critical technologies that may pose a
national security threat to the country, especially in areas like artificial
intelligence, biotechnology, and clean energy. That includes directing the
Committee on Foreign Investment in the U.S., which reviews these business
opportunities, to examine a series of transactions that might appear safe in
isolation—but are more concerning when grouped together. The panel must also
consider cybersecurity issues and any risks around the personal data of U.S.
witnessing booming demand amid global supply chain issues during the pandemic,
the semiconductor industry is facing a slowdown. The world chip sales growth
has fallen for six straight months. Despite strong government support, many
chipmakers have slashed billions of dollars off their planned capital
expenditure due to shrinking consumer demand.
inflationary pressures and fears of a recession have slumped the demand for
semiconductors from electronics, automotive, and other sectors for the second
consecutive month in August.
technicals remain slightly bearish with the put-call ratio at .82, and the
current RSI is at 35, indicating the stock is oversold. Investors and traders
are clearly on the back foot, as the increasingly dovish monetary policy is
weighing on sentiment.
AMD has risks and the global economy
slowing down leading to a cyclical downturn, combined with excess investment
leading to a chips glut, remain the biggest ones.
Eugene Norrod sold 824 shares of Advanced Micro Devices stock in a transaction
dated Thursday, August 18th. The stock was sold at an average price of $99.31,
for a total value of $81,831.44.
Rick Bergman sold 3,000 shares of the business’s stock in a transaction that
occurred on Tuesday, August 23rd. The stock was sold at an average price of
$92.39, for a total transaction of $277,170.00.
Advanced Micro Devices had its price objective reduced by investment
analysts at Mizuho from $140.00 to $125.00 in a research report issued to
clients and investors on Thursday, last week. The brokerage currently has a
“buy” rating on the semiconductor manufacturer’s stock.
to the issued ratings of 30 analysts in the last year, the consensus rating for
Advanced Micro Devices stock is Moderate Buy based on the current 7 hold
ratings, 22 buy ratings and 1 strong buy rating for AMD. The average
twelve-month price prediction for Advanced Micro Devices is $125.30 with a high
price target of $200.00 and a low price target of $85.00.
AMD has registered weak momentum over the past months. It is currently
trading near its 52-week low of $71.60, which it hit on July 5, 2022. And given
the semiconductor industry’s grim near-term outlook, this fundamentally weak
stock might plunge further.
AMD has a market capitalization of $123.29 billion, a PE ratio of 31.62,
and a P/E/G ratio of 0.71 and a beta of 1.97. The company has a debt-to-equity
ratio of 0.04, a current ratio of 2.44 and a quick ratio of 1.96. The
business’s 50 day moving average price is $89.04 and its 200-day moving average
price is $93.67. Advanced Micro Devices, Inc. has a 52-week low of $71.60 and a
52-week high of $164.46.
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