The last time I wrote about Advanced Micro Devices (NYSE:AMD), I said Advanced Micro Devices stock could maintain its momentum and stay hot, adding that for “long-term buy-and-hold investors AMD does appear attractive at current prices.”
That’s when AMD stock price traded was $28.90. Advanced Micro Devices stock jumped to $41.79 before pulling back to $39.25.
For the year, AMD stock price is now up 112%, with no shortage of love from analysts.
AMD Is Even Getting Plenty of Love From Analysts
Cowen analyst Matthew Ramsay reiterated his “outperform” rating Advanced Micro Devices stock, saying he was upbeat on the name after meeting with AMD CEO Lisa Su.
“We believe AMD’s consistent track record of execution under her leadership, and stable roadmap, is increasingly resonating with customers and investors,” he noted.
Wells Fargo analyst Aaron Rakers jumped on the bandwagon, increasing his price target to $48 from $40 on the heels of gains in the server market.
“We continue to see AMD’s wins in [High Performance Computing] / supercomputing as increasing validation of the company’s strong competitive positioning in datacenter CPUs…thus remaining supportive of our positive upside thesis,” he wrote.
However, as bullish as these analysts are, I’d suggest waiting for the stock to pullback. At the moment, it’s become aggressively overbought at its upper Bollinger Band. Advanced Micro Devices stock is also oversold on RSI, MACD, and on Williams’ %R.
But once it pulls back, it will be one of the best stocks to consider for 2020.
AMD Stock Still Has Plenty of Growth Ahead
In recent weeks, investors were let down by AMD.
Its net income came in at $120 million, or 11 cents per share last quarter, compared to the $102 million and EPS of 9 cents during the same period a year earlier. Its revenue shot up to $1.8 billion from $1.65 billion.
Analysts, on average, were looking for 18 cents on sales of $1.81 billion.
However, the company’s slightly weaker than expected guidance didn’t sit well with the owners of Advanced Micro Devices stock. AMD now expects Q4 revenue of $2.05 billion to $2.15 billion. Analysts, on average, were looking for $2.15 billion.
Still, even with that slight hiccup, there are plenty of catalysts ahead for AMD stock.
One, as InvestorPlace contributor Laura Hoy noted, “Over the next six months, Advanced Micro Devices is planning to launch more 7-nm products that are expected to give a significant boost to the firm’s bottom line. Analysts at Cowen told clients the line of products will, “drive above-consensus growth, share gains, margin expansion and AMD share appreciation.”
Two, gaming consoles from Microsoft (NASDAQ:MSFT) and Sony Corporation (NYSE:SNE) due to be launched next year use AMD chips. That alone offers AMD a powerful catalyst.
Three, AMD continues to chip away at Intel’s (NASDAQ:INTC) lead in the computer chip market.
In fact, AMD’s 7nm Ryzen 3000 processors are seriously challenging Intel’s market position. At the end of Q3, AMD had an 18% share of the desktop chip market, up from 17.1% at the end of Q2, and 5% in Q2 of 2018. In Q3, its market share in mobile processors jumped 3,8 percentage points YoY to 14.7%, according to Tech Radar, which added:
“With AMD’s CEO, Lisa Su, promising Ryzen 4000 Mobile processors in early 2020, , we could see further growth in this key market for AMD. It’s already scored a big win with Microsoft releasing an AMD-powered Surface Laptop 3. Previously, Surface devices have used Intel processors exclusively.”
The Bottom Line on Advanced Micro Devices Stock
With plenty of growth in store for 2020, there’s plenty to like about AMD stock. The only concern I have at the moment is how technical overbought Advanced Micro Devce stock has become.
Once AMD stock price drops meaningfully, I’d recommend accumulating Advanced Micro Devices stock for the long-term.
At the moment, AMD is not attractive
As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
