Advanced Micro Devices (NASDAQ:AMD), commonly known as just AMD, is a premier American chipmaker and its investors will usually win in the long run. However, today’s AMD forecast shows that getting in too early will likely be a costly mistake. So, check both the company’s fundamentals and the price chart if you’re thinking about buying AMD stock.

There’s an old stock-market saying that it’s better to be late than early with your entries. Waiting for the selling pressure to subside is a smart move – and as we’ll see, despite AMD’s solid financial results, the selling pressure has been quite intense.

AMD Prepares to Sell Plenty of AI Chips

Here’s some good news for AMD’s investors. The company released its second-quarter 2024 results not long ago, and overall, they were better than expected.

First of all, AMD’s Q2-2024 revenue of $5.8 billion beat Wall Street’s consensus call for $5.7 billion. Moreover, the company reported earnings of 69 cents per share, slightly exceeding the analysts’ consensus estimate of 68 cents per share.

The main highlight was AMD’s data-center revenue, as this segment includes sales of artificial intelligence (AI) chips. As it turned out, AMD’s data-center revenue soared 115% year over year to $2.8 billion, edging past Wall Street’s consensus forecast of $2.79 billion.

Looking ahead, AMD guided for third-quarter 2024 revenue of “approximately $6.7 billion, plus or minus $300 million.” The midpoint of this range implies year-over-year revenue growth of around 16%, which isn’t spectacular but is at least respectable.

AMD Chart Analysis: A Breakdown Is Afoot!

To be a well-rounded investor, it makes sense to combine fundamental factors with technical analysis. Otherwise, you might leap into a trade that you’ll end up regretting.

For today’s technical analysis, I’m using the weekly AMD stock candlestick chart because it eliminates a lot of the day-to-day noise/distractions in the price action. While AMD’s quarterly financials were acceptable, checking the share-price chart reveals some major concerns.

As you can see, the AMD share price fell below the 20-week moving average (shown in blue) and the 50-week moving average (shown in purple). These are short-term and medium-term trend indicators, respectively.

At least, we can say that AMD stock hasn’t broken below the 200-week moving average (shown in black), which is a long-term trend indicator. If that happens, a huge wave of selling pressure could commence. Also, if the 20-week moving average crosses below the 50-week moving average, that would portend more trouble.

AMD Forecast: Use Caution Now, Avoid Problems Later

AMD’s recently released quarterly results were good, and the company’s current-quarter sales outlook is decent. Yet, there’s more to the story. The chart lines suggest that AMD stock is in danger of succumbing to further selling pressure.

Consequently, investors shouldn’t risk being too early in their entries. Instead, let the selling pressure subside. It’s fine if you’re a little bit late and you don’t catch the exact “bottom” of the price reversal.

Hence, the AMD forecast calls for caution. Just relax, watch and wait for more constructive price action in the AMD stock chart.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.