When things are this wild on Wall Street, I like to bet on champions. Advanced Micro Devices (NASDAQ:AMD) was the best performing stock in the entire S&P 500 for two years running. This year AMD stock is also doing well up 72%, which is more than double that of the NASDAQ and 30% more than Apple (NASDAQ:AAPL).
Investors are comfortable relying on the job that Lisa Su is doing there. Her leadership has turned this ship around and is no longer fighting for scraps. There are better performing stocks like Zoom (NASDAQ:ZM) or Novavax (NASDAQ:NVAX), but those are special circumstance bets. The opportunity in AMD is much more certain.
2020 is a global test for intestinal fortitude but there may be good coming from it. Although the pandemic was a humanitarian disaster, it unleashed a massive wave of digital migration. The trend has been going on for years but there have been long term holdouts who have resisted it. The lock-down forced their hand and now everyone has to get on board of the digital revolution train.
Stay Long AMD Stock Through Thick and Thin for Years
Today I reiterate my message that AMD stock is a BUY on every dip into pivots. While I sound like a perma-bull, I assure you that I am not. Late August I suggested that the stock ‘could use some rest’ and that was very timely. The correction came next and here it is trying to find footing again +1.8% on Monday.
My message has been consistent in many write-ups before about AMD stock. In the long run and under the current plan the stock price is going up. If the equity markets are higher down the line then so is this one. Recently Nvidia (NASDAQ:NVDA) has taken center stage because of its bold moves like buying ARM. There’s no doubt that the two are in a fierce battle and almost no one is paying attention to Intel (NASDAQ:INTC). In reality the digital movement is so huge that there is enough room for all three to thrive. I have no doubt that these three stocks make for good long-term bullish investments.
Look Through the Noise Because the Fundamentals Matter
Shorter term there will be distractions from noisy headlines. For example, Micron (NASDAQ:MU) reports its earning this week so there might be some temporary sympathy moves from that.
After all said and done the fundamentals will matter. AMD stock is not cheap from the traditional sense. Many experts balk at its 150 price-earnings ratio. In reality it’s dirt cheap compared to Nvidia. There is not a lot of froth priced into the stock now from its future earnings. The AMD stock bulls are realistic in their expectations. This lessens the odds of disappointment down the line.
Extra Headline Clutter than Usual This Year
Since this is an election year we might see risk emerging soon from trade-war rhetoric. This year there is the added twist of the TikTok situation and it’s purchase by an American company. The White House is meddling with the Oracle (NASDAQ:ORCL) bid and the Chinese authorities won’t take kindly to that. In the end business will prevail and we will move on from these distractions.
The experts will try to convince us that these squabbles are bad news for chip stocks. But in reality it’s nothing but short-term noise. They will also extrapolate risk onto Apple (NASDAQ:AAPL)’s prospects in China but that too is fluff. If these stocks dip considerably on headlines, then they would make for even better buying opportunities for the long term.
The need to go digital on a global scale just got a massive shot of adrenaline. The trend that had been already underway is now a mega trend. There is absolutely no way this will fade anytime soon. Tech begets the need for more tech and it’s been that way since the beginning of time.
On the date of publication, Nicolas Chahine did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Nicolas Chahine is the managing director of SellSpreads.com.