3 Reasons to Buy AMD Stock Before the Upcoming G20 Meeting

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With the G20 meeting set for June 28 and 29, all eyes are on presidents Donald Trump and Xi Jinping. The markets keep searching for clues as to whether a historic trade deal is afoot. Some analysts and commentators are anticipating an easing of tensions in the ongoing U.S.-China tariff war that has hit chip stocks hard — including Advanced Micro Devices (NASDAQ:AMD).

At This Point, the Smart Move for AMD Stock Is to Wait

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There’s certainly no guarantee that progress will be made at G20. However, any perceived headway at the highly anticipated Osaka meeting would be a perfect excuse for the AMD stock price to stage a swift recovery. Just recently, the U.S. government added five Chinese companies to its “Entity List,” a blacklist restricting AMD (as well as rivals Intel (NASDAQ:INTC) and Nvidia (NASDAQ:NVDA)) from selling hardware to those companies.

You might not have heard of these five companies — Sugon, Higon, Hygon, HMC and Wuxi Jiangnan Institute of Computing Technology.  They’re all major players in Chinese tech. Placing them on the blacklist is, no doubt, a cause for concern for AMD shareholders.

But just as easily as Trump can impose this restriction, he can lift those restrictions. G20 would be an ideal setting for a détente in the tariff tug-of-war. By uttering a few words or posting a tweet, the president could send Advanced Micro Devices stock soaring — and as a “buy low, sell high” investor, the right move is to start accumulating shares before this happens.

AMD Stock Is Still a Hardware Powerhouse

Intel and Nvidia have made the semiconductor space ultra-competitive, but AMD has responded by ramping up its hardware offerings as of late.

Sure, there’s been no shortage of buzz surrounding Intel’s Core i9-9900K, a mainstream processor with robust multi-threading performance. But AMD, not to be one-upped by its nemesis, has countered with the Ryzen 7 3800X — and by all accounts, it’s an absolute beast. Early leaked reports indicate that the Ryzen 7 3800X returned a multi-core result of 34,059 — markedly higher than the Intel Core i9-9900K’s result of 33,173.

With the July 7 release date right around the corner, and with a (literally) game-changing price tag of just $399, the Ryzen 7 3800X is in itself a compelling reason to grab shares of AMD stock in anticipation of serious price appreciation

An Earnings Beat Would Seal the Deal for Advanced Micro

A trade deal would undoubtedly impact AMD shares, but let’s not bury the headline. The company’s set to deliver its earnings report on July 24. As a contrarian investor, I tend to view the market’s low expectations as a reason to start buying, not an excuse to sell.

Since AMD derives significant revenue from China, any disappointment in the G20 talks could send the price of AMD stock lower. However this would also drive expectations even lower. And that sets the company up for a solid earnings beat and a short squeeze of epic proportions.

Besides, much of the reason for the low expectations stems from Broadcom’s (NASDAQ:AVGO) disappointing earnings and guidance results from earlier this month, along with industry-wide bearish price action that’s not endemic to AMD in particular. The point is: I’m more than happy to trade low expectations, in expectation of higher prices.

The Bottom Line for AMD Stock

One thing I’ve learned over the years is that tension always gets released sooner or later. No matter what happens at the G20 Summit, I expect the built-up tension to give way to a big exhale of relief. That should mean a nice boost for early stakeholders in AMD.

As of this writing, David Moadel did not hold a position in any of the aforementioned securities.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


Article printed from InvestorPlace Media, https://investorplace.com/2019/06/3-reasons-to-buy-amd-stock-before-the-upcoming-g20-meeting/.

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