HomeBusinessAI Play AMD Stock May Be Nearing a Breakout

AI Play AMD Stock May Be Nearing a Breakout

Advanced micro devices (AMD) was one of the first to follow Nvidia into the artificial intelligence market. It’s starting to pay off for Santa Clara-based AMD. The stock traded up more than 200%, from a low of 54.57 in October 2022 to Thursday afternoon at around 164. Also on Thursday, the Relative Strength (RS) Rating for AMD stock climbed to 84, up from 80 the day before.

The upgraded 84 RS Rating for AMD stock shows that the chipmaker’s stock is in the top 16% of all stocks in IBD’s database. It’s a remarkable distinction. More than 100 years of market history shows that the best stocks typically have an RS Rating of 80 or better when they launch their biggest runs.


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AMD shares are rising. Ready for a breakout?

Furthermore, AMD is a leader in the artificial intelligence revolution. It competes with Intel (INTC) about microprocessors, the ‘brain’ of computers. And it competes with Nvidia (NVDA) with a graphics processor, the chip technology that servers use to process AI transactions.

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AMD is positioned for growth and has good ratings. However, keep in mind that the basic principles of this system have room for improvement. The consensus among analysts is that improvement could be just around the corner.

The watchlist candidate reported a slight 3% increase in earnings per share last quarter to 62 cents on 2% higher revenue of $5.47 billion. The consensus forecast is for earnings per share to rise 60% this quarter on revenue growth of 7%, with even stronger growth projected later this year.

Meanwhile, among its other key ratings, AMD has a bullish Earnings Per Share Rating of 99. Its composite rating is a mediocre 78, and its SMR (revenue + profit margins + return on equity) rating is a mediocre C on a Scale of A to E.

The funds are piling up in this AI game

Reflecting its excellent fundamentals, AMD stock has a weak E Accumulation/Distribution Rating, a measure of buying by institutional investors. Still, the number of funds tracking AMD stock increased from 4,060 in September to 4,226 in December. The number rose to 4,357 in March, according to data from MarketSurge.

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AMD shares rose Thursday afternoon. It is more than 5% past an entry of 125.72 in a second stage cup with handle. That means it’s now outside a good buying zone. Look for stocks that offer a new buying opportunity, such as a three-week squeeze or a pullback to the 50-day or 10-week line.

AMD stock ranks 13th among its peers in the 39-stock Electronics-Semiconductor Fabless industry group. NVIDIA (NVDA), Arm positions (ARM) and Broadcom (AVGO) are among the top 5 highly rated stocks in the group.

IBD’s proprietary RS Rating measures technical performance by showing how a stock’s price movement over the past 52 weeks compares to that of the other stocks in our database.


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