Advanced Micro Devices (NASDAQ:AMD) stock reached oversold levels recently. The AMD forecast reveals that the last time this occurred in April, its share price rebounded by around 30%. However, there is a striking difference for the semiconductor player between then and now.

Recent price declines have sent AMD stock prices well below both the 200-day and 50-day moving averages (MAs). Conversely, the share price drop in April did not even reach the 200-day MA support. The 50-day MA now approaches the 200-day MA, and this “death cross” looming on the horizon could a harbinger for further drops.

AMD’s financial performance has investors evaluating whether AMD stock is a buy or a sell also in the long term. The AMD forecast shows positive long-term prospects based on improving metrics and technical analysis. However, as declines continue in the short term, bulls must maintain firm support at the 200-week MA.

AMD at Risk of a Death Cross

Some investors and traders may view the current technical sentiment around AMD stock as mixed. Some view the drop in the Relative Strength Index (RSI) as an opportunity to buy the dip, while others focus on recent weakness emanating from the reversion below both the 200-day and 50-day MAs.

If the 50-day MA at $160 per share crosses below the 200-day MA at $155 per share, this could weigh more on AMD prices. Should it happen, the focus should shift to how quickly it recovers, if it recovers.

The AMD forecast in the long term shows that the stock’s trend remains intact while prices trade above the 200-week MA at $108 per share. Currently, analyst forecasts also point to upside in the next 12 months, with a 40% rise predicted to send prices to $187 per share.

However, prices are approaching the 100-week MA of $118 per share, which implies more downward pressure. Although a short-term buy opportunity could arise, the AMD forecast will remain bearish as long as AMD trades below the 200-day MA.

Strong Long-Term Prospects

AMD reported an impressive second-quarter earnings growth of 700% year-over-year (YoY), with record data center segment revenue of 115% to $2.8 billion. Notably, AMD’s data center revenue increased its gross margin by 49% in Q2. Total revenue is expected to end next year 28% higher than in 2024 after rising 9% last quarter.

The planned $665 million acquisition of Silo AI is also expected to strengthen AMD’s position. The Artificial Intelligence (AI) chip market is projected to increase at a 36.6% Compound Annual Growth Rate (CAGR) through 2030. Despite intense competition, AMD’s high price-to-earnings (P/E) ratio of 158x may be justified by CPU sales and AI innovations.

The stock has surged over 300% since 2019 and is valued at around $134 per share. Despite being down year-to-date (YTD) following recent drops, AMD stock still trades around 20% higher over the past 12 months. For next year, analysts expect an EPS of $5.40 per share, which is a 61% increase compared to 2024 expectations.

The Baseline: Buy the Lower Dip

Given its financial metrics and AI market potential, AMD stock appears to be a buy for long-term investors seeking growth.

However, a technical-based AMD forecast reveals mixed signals, with strong fundamentals and moving averages pointing in different short- and long-term directions. Therefore, buying or selling AMD stock depends on each trader’s time horizon and risk tolerance.

Despite positive fundamentals, short-term investors may prefer to wait for more constructive price action before buying. One sign would be the waning of the death cross risk. Conversely, short-term traders may prefer to take advantage of the potential drop.

Entering a buy position at the 100-week MA near $118 may be ideal for most risk profiles. Upward exits can be seen at $140 per share, $185 per share and at the record high, with a stop under the 200-week MA at $108 per share.

This entry and stop loss provide a risk-reward ratio of over 10 at the far end of the target at $226 per share, with the lower end at $140 per share presenting a decent 2.2x.

On the date of publication, Stavros Tousios 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.