After a red-hot run wherein the stock more than doubled in a few months, Advanced Micro Devices (NASDAQ:AMD) stock has cooled off over the past few weeks. Ever since AMD stock crossed above $30, the stock has traded largely sideways in the lower-$30s.

That’s a surefire sign that this market won’t push AMD higher until the company proves its market share gains via robust quarterly numbers. More than that, Intel (NASDAQ:INTC) just reported that 10nm chip production is moving in the right direction, and that isn’t good news for AMD, which has been propped up on the idea that AMD has a huge 10nm lead on Intel.

Whereas things once looked very promising for AMD, they don’t look so great anymore. On the heels of a massive rally, the stock could drop if the fundamentals weaken substantially. Thus, investors should be asking the question: is AMD at a tipping point?

I don’t think so. Intel’s 10nm production is moving in the right direction. But, volume production still isn’t expected until 2019, and likely late 2019 at best. Thus, AMD still has a twelve month window here to run in open fields and significantly grow market share.

That means AMD’s numbers will be pretty good, and so long as those numbers are good and support share expansion, AMD stock will head higher.

That being said, AMD stock won’t head higher before the next earnings report. This stock has turned into a “show me” situation. Until AMD proves significant share expansion through strong quarterly numbers, the market won’t send AMD any higher.

This is especially true considering the most recent fundamental update we have on the situation is improving 10nm production at Intel. Thus, until the next earnings report, AMD stock will likely be stuck in neutral.

Investment takeaway? There’s no need to hold onto AMD here and now. Let this stock cool off. Take some profits off the table. Then, buy back in before the next earnings report, which is due at the end of October.

Intel’s Is Moving in the Right Direction

Over the past several months, the narrative in the semiconductor market has been dominated by AMD having a considerable 10nm lead over Intel. AMD management was talking up next-gen chip production capacity.

Intel management was consistently delaying 10nm volume production. Insiders were commenting on AMD’s technical gains. Analysts were upgrading AMD stock on the idea that this 10nm lead would allow AMD to significantly grow market share.

As result of this narrative being favorable for AMD and unfavorable for Intel, the companies’ stocks soared and dropped, respectively. But, this narrative appears to be changing course, and that isn’t great news for AMD.

The most recent chapter in this narrative is Intel’s supply update. In this update, Intel mentions that 10nm yields are improving and that volume production is expected for 2019.

This is a critical update because it breaks the recent trend of Intel struggling with early-stage 10nm production and delaying volume 10nm production. This update shows that Intel’s 10nm production is moving in the right direction.

That is a big shift in the semiconductor narrative. This narrative shift is a good thing for Intel and a bad thing for AMD.

It means that AMD’s lead in 10nm is narrowing, and because we don’t have recent numbers from Intel, the market will trade AMD based on this recent Intel update. Thus, sentiment in the stock will weaken, and that will likely keep AMD from heading higher for the next several weeks.

AMD Stock Won’t Head Higher for the Foreseeable Future

It isn’t just a narrative and sentiment shift that will keep a lid on AMD. There are many reasons why AMD won’t head higher until the next earnings report in late October.

First, this stock has gone parabolic over the past few months. That momentum was unsustainable. Indeed, the momentum hasn’t sustained.

AMD has been stuck in neutral for a few weeks now. In all likelihood, this stock will likely trade sideways until the fundamentals and technicals catch up to the stock price. This is a natural consolidation period after a massive rally.

Second, you will likely get a lot of profit-taking over the next few weeks. AMD went from $15 to $30 without much volatility, meaning there weren’t many profit-takers. But, that means you have a bunch of investors and traders who have made 100% profit in a few months.

Naturally, as this parabolic run has paused and the fundamentals have weakened with the Intel update, a healthy number of those investors and traders who are up big will do some profit-taking. That will create additional selling pressure.

Third, the bulk of analyst upgrades are likely in the rear-view mirror. A big catalyst in the AMD rally was a plethora of analyst upgrades. But, it seems like all the big names have already upgraded the stock.

Over the past month alone, RBC, Stifel, Morgan Stanley, Jefferies, Mizuho, Argus, FBN Securities, Rosenblatt, Susquehanna, Bank of America Merrill Lynch, and Cowen have all either upgraded AMD stock and/or upped their AMD price targets. In other words, there isn’t much firepower left in the analyst community to provide a lift for the stock.

Bottom Line on AMD Stock

I think this is a “sell now, buy later” situation. AMD stock looks doomed to trade sideways and/or fall over the next several weeks. But, a positive earnings report could cause this stock to reverse course, so I think you want to buy back into AMD before that report in late October.

As of this writing, Luke Lango was long INTC.