Should you buy AMD stock right now? It wouldn’t be an exaggeration to say chipmaker Advanced Micro Devices (AMD) started off the year with a bang. We saw AMD stock prices surge to a new all-time high.
On the first day of trading of 2020, AMD finally surpassed its previous all-time high, which was set during the dot-com bubble nearly 20 years ago. Even in the last four years alone, prices rose from just above $2 to $51. But, the question remains, “should you buy AMD stock right now?
- SHould you buy AMD right now? The gains are impressive, to say the least. Year over year, AMD shares are up an impressive 158%. To put this in perspective, Intel ($INTC); one of AMD’s main competitors, showed gains of just 44%. And there’s more; AMD even outperformed the iShares PHLX Semiconductor ETF ($SOXX). All of this, despite the fact it was up 64% YOY as well. Furthermore, AMD even made the top S&P 500 stock pick of 2019!
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Recently $AMD has been pulling back from all time highs. Lets look at it closer below.
How AMD Is Crushing Its Competition
If you’re wondering if you should buy AMD stock right now, let’s look at it’s competition. Coming to price performance, in the past year, shares of AMD have returned 158%, significantly outperforming the industry’s rally of 50.6%.
I think AMD could have another explosive year head; this is especially true as it continues to gain market shares from Intel.
Currently, Intel is struggling with processor shortages. Unfortunately, yet predictably, notebook vendors are looking elsewhere to source.
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Is AMD The NVIDIA Killer?
Did you know that the GPU market’s pegged to hit $104.71 billion in sales by 2025? Most of this growth’s attributed to advancements in augmented reality (AR), virtual reality (VR) and artificial intelligence (AI).
Not to be left behind, AMD has been reportedly developing advanced high-performance graphics card, to challenge NVIDIA’s $NVDA dominance in the high-end GPU market.
The GPU’s allegedly dubbed the “NVIDIA Killer” and touted to be 30% faster than NVIDIA’s RTX 2080 Ti. I’m sure this has the NVIDIA shareholders squirming in their seats.
With the rumored 2020 launch of the new GPU, AMD will be the heavy hitter on the high-end graphics card market. And the stats don’t lie.
According to the 3rd quarter 2019 data, AMD’s market share in discrete GPU shipments was 27.08%. This was up from 25.72% in third-quarter 2018. O
n the flip side, NVIDIA’s market share declined to 72.92% from 74.28% in the same period. AMD continues to pull winning cards from their hat.
In 2020, this card is gaming consoles. For one thing, both Microsoft and Sony are launching new gaming consoles with AMD chips.
What’s more, AMD’s GPUs based on Navi gaming architecture, is compliant with PCIe 4.0 and offers high-speed GDDR6 memory.
In laymen’s terms, the user will have a impressive visual gaming experience. If that doesn’t speak to the earning potential of AMD, I don’t know what does.
Check out the monthly chart as of February 2020. $AMD has completed a MAJOR cycle breakout and major cycle high into trend line resistance. As a technical trader do I buy here? Looking at the chart, from a technical stand point, it doesn’t look like the best entry. However, resistance can break, and stocks that continue to make all time highs tend to continue to do so. But you should really take a look at the charts and decide for yourself.
What Are the Best Stocks to Invest in Right Now?
- Should you buy AMD right now? The market has been rising for quite some time. As a result, you’d like to make sure you have the best stocks to invest in right? Be on the lookout for the best stocks with the best growth potential to invest in right now.
What Are the Analysts Saying?
Should you buy AMD right now? Matthew Ramsay, Cowen analyst, adjusted his valuation target from $47 to $60. His rational: AMD’s consistent track record of execution and stability combined with their premier products.
We also see similar sentiment from Deutsche Bank analyst Ross Seymore. Even though he has a “hold” rating on AMD, he raised the price target from $29 to $40. According to Seymore, “We fully expect AMD’s strong product/strategic execution to continue in 2020 and 2021.”
Furthermore, due to gains in the server market, Wells Fargo analyst Aaron Rakers increased his price target from $40 to $48. His justification: AMD’s position in high-performance computing and its strong competitive positioning in data center CPUs. Checkout Tipranks for an updated report.
The Bottom Line
Should you buy AMD right now? AMD continues to chip away at the market share from heavy hitters like Intel and NVIDIA ($NVDA). With sufficient wiggle room for growth and ability to chip away the competitors’ market share, AMD isn’t going anywhere any time soon.
However, the risks to the global semiconductor industry posed by the Covid-19 outbreak have grown over the last few weeks and have left us with a shaky market.
As of writing this, AMD closed at $49.00, down from $60 a few days prior. The drop of around 10% is attributed to concerns that the Coronavirus outbreak would dampen chip demand in China. To make matters worse, AMD reported mixed fourth-quarter numbers.
But, global epidemics historically tend not to have an impact on the semiconductor market. SARS, for example, didn’t impact the semiconductor market in 2002.
On the contrary, sales of semiconductors rose across the globe during the SARS outbreak. Similarly, during the H7N9 epidemic of 2010, global semiconductor sales rose.
What Should You Do?
Should you buy AMD right now? Overall, I think the impacts of Coronavirus will be felt across the board. On the plus side, though, it could be an excellent opportunity to dip buy those stocks you couldn’t afford prior.
To answer the question, “Should you buy AMD stock right now?” My answer: What does the chart tell you? And the fundamentals? Take a look at both and decide using a bit of good ol fashioned analysis.
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