At the commencement of last month, shares of Advanced Micro Devices Inc (AMD) surged to an unprecedented all-time high. The trajectory indicated a continued surge until the month-end. However, a subsequent 23% downturn in the stock has set the stage for a challenging start to Q2, leaving investors pondering whether this is a temporary pullback or the onset of a broader downtrend.
Interestingly, while AMD witnessed a decline, the S&P 500 index climbed. This divergence from the broader market is noteworthy, especially considering the S&P 500’s recent record high close.
Diverging Paths with Competitors
AMD’s chief competitor in the semiconductor realm, Nvidia Corporation (NVDA), also struggled to surpass its early March peak. However, unlike AMD, Nvidia made a close attempt at a comeback last week, positioning its shares within a 10% range of the previous high. This juxtaposition raises questions about AMD’s lagging momentum despite a remarkable 190% year-over-year gain driven by the AI wave.
Challenges in China
The narrative shifts to China, where Nvidia is set for a brisk AI chip production launch, while AMD awaits clearance from the U.S. Bureau of Industry and Security. The delayed approval coupled with talks of a potential ban on AMD chips in China clouds the company’s future. In the same vein, Intel Corp (INTC) found itself in a similar predicament, but Nvidia circumvented the turmoil, poised to begin Chinese market production.
Amidst these challenges, AMD’s shares struggled to establish new lows for nearly two weeks, indicating a consolidation phase. Recent market activity suggests a slow turnaround, with a 5% rebound from the low and promising signals from the stock’s RSI and MACD metrics—both hinting at a shift from bearish to bullish momentum.
Promising Signs Ahead
Despite the uncertainties, AMD has evaded downgrades in the past month. Mizuho and DZ Bank reaffirmed their Buy ratings, with Mizuho even elevating the price target from $200 to $235. With the stock closing near $181, the potential 30% upside beckons keen observers to consider a position, especially during a period of positive market trends and optimistic analyst predictions.
Watch out for AMD’s stock to sustain a bullish trajectory into the following week, with a breakthrough above $188 signaling a robust rebound in progress, setting the stage for a compelling opportunity.
This article on AMD’s resurgence was first published on MarketBeat.