AMD Rose 20% in Two Weeks. Here Is What Its Chart Shows

8月22日

Advanced Micro Devices AMD has gained some 20% in the past two weeks, rising in part on news of plans to buy privately held server maker ZT Systems for $4.9 billion. Where does technical analysis say the stock might go from here?

The ZT acquisition, which AMD announced on Monday, appears to be all about keeping up with Wall Street darling Nvidia NVDA in the hot area of generative artificial intelligence, or “AI.”

Chips designed by firms like AMD and NVDA perform all of the calculations that make generative AI possible. They are the brains of a network that stitches a multitude of servers together inside a data center.

AMD is buying ZT for its expertise in this space, paying 75% cash and 25% stock in a deal the company expects to close next year.

The company said in a statement announcing the deal that it plans to divest the part of ZT that manufactures servers, which is currently ZT’s primary revenue-producing business. AMD appears to just want ZT’s AI people.

Now, AMD seems unlikely to catch Nvidia any time soon in the data center/cloud/AI race. But the ZT deal could help the company remain No. 2 in the space, biding its time and staying relevant and competitive.

AMD has already come a long way since Lisa Su took over as president and CEO in 2014 (and as board chair in 2022).

First it was PCs and CPUs, as AMD over time stole market share from once-dominant Intel NASDAQ:INTC. Next AMD focused on gaming, GPUs and the data center.

Now the company is taking aim at generative AI, once again doggedly pursuing an industry giant (NVDA) that has a big lead -- and an even bigger reputation. The game afoot only grows more complex, and the technology more advanced as time goes on.

AMD’s Fundamentals

As for fundamentals, AMD still has two months until it reports results for the current quarter in late October.

Last month, the company posted second-quarter earnings that beat the Street on both the top and adjusted bottom lines, with 9% year-over-year sales growth.

For the current quarter, the Street currently expects to see 32% year-on-year earnings growth and 16% revenue gains. If achieved, the results could represent AMD’s hottest quarter for sales growth since 2022, as well as its best earnings growth in even longer than that.

Of course, AMD’s data center will have to lead if that’s going to happen, and Wall Street would like to see the company’s gap with Nvidia close just a bit among the firm’s higher-tech chips.

AMD’s Technicals

In the meantime, what might AMD’s chart tell us? Let’s take a look at where things stood as of Tuesday:



The chart above shows a so-called “falling wedge” pattern, which historically denotes a bullish reversal.

This pattern began back in March and continues to the present. Readers will also note that AMD has just retaken its 50-Day Simple Moving Average (the blue line in the chart above) and is now trying to retake its 200-day Simple Moving Average (the red line) as well. That makes the 200-Day SMA the stock’s current pivot point -- $156.78 as of Tuesday.

In support of this set-up, AMD has a Relative Strength Index reading of 60, as denoted by the gray line above. That’s strong but not technically overbought, and is still rising in the chart above.

We also have a Daily Moving Average Convergence/Divergence indicator (MACD) where the histogram of AMD’s 9-Day Exponential Moving Average (or “EMA,” denoted by the blue bars at the bottom of the chart above) is already in positive territory.

Meanwhile, AMD’s 12-day EMA (the black line above) has already crossed over the 26-Day EMA (the gold line). This crossover is typically a bullish sign, and would mean even more if the two averages were already in positive territory to go along with the stock’s positive 9-Day EMA.

That's not very far from happening. Perhaps a push above the 200-Day SMA would bring in some capital if portfolio managers felt forced to increase their exposure.

(Full disclosure: Moomoo Markets Commentator Stephen Guilfoyle was long both AMD and NVDA at the time of writing this column.)

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