Wall Street’s choir has been loudly singing the advantages of owning Advanced Micro Devices (NASDAQ:AMD) stock the last few trading sessions. But is now a better time to buy, sell or pass on AMD? Let’s take a look at what’s happening off and on the price chart to come up with a stronger risk-adjusted determination.
Analysts have been busy generously doling out recommendations, reiterations and price target hikes in AMD stock. This past Friday saw RBC hike its target on Advanced Micro Devices from $44 to $50. On Monday, it was Cowen’s turn. The firm reiterated an “outperform” rating and raised shares from $40 to $47. And the bullish praise hasn’t been without good reason either.
So what exactly have these analysts been giving thanks for? Well, they cite improved market share, demand for AMD’s data center products and a strong management team. Plus, Advanced Micro Devices has been chipping away at Intel’s (NASDAQ:INTC) lead. Do you still want more? How about thirds?
On Tuesday, Wells Fargo’s Aaron Rakers became the third analyst to praise AMD stock this week. Rakers sees Advanced Micro Devices stock’s wins in high performance computing and super-computing as further validation of the company’s strong competitive positioning in the data-center market.
Not happy to simply talk the talk, Wells Fargo also reiterated its “outperform” recommendation and hiked AMD’s price target from $40 to $48. Still, seven weeks into AMD’s largest rally since 2012, investors may be better served to do their own version of walking the walk until after the Thanksgiving holiday.
Advanced Micro Devices Stock Weekly Chart
I wouldn’t say AMD needs to trim off extra fat on the price chart. But excessive levels of bullishness have resulted in shares rallying aggressively outside the weekly Advanced Micro Devices stock price chart. At the same time, Advanced Micro Devices stock is sporting a riskier overbought stochastics setup. Together, my observation is the stock needs a period of rest to digest its gains.
A solid-looking monthly chart detailed at InvestorPlace in late October remains the trend to ride for positioning in AMD. Right now though, my advice for buying into shares is to allow for at least one or two weeks of consolidation before making an outright purchase of AMD stock. In my view the shorter-term excesses in Advanced Micro shares are trumping the big picture. And I’m confident investors with a bit of patience will be rewarded.
Sure, waiting on the sidelines sounds like a lot to ask of Advanced Micro Devices stock at this point in time. But so did my much less-popular upside forecast of $48.50 in Advanced Micro Devices after its mixed earnings report. That price target now finds itself in very good company. But there’s one too many chefs in the kitchen in front of the holiday.
Investment accounts under Christopher Tyler’s management currently and continue to own positions in Advanced Micro Devices (AMD) and its derivatives, but no other securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.
