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AMD Stock: Why Invest in Advanced Micro Devices


Mar.17.2016

AMD Stock: Why Invest in Advanced Micro Devices

The AMD stock is one that my tech savvy husband has been talking about for months. I never thought Advanced Micro Devices, Inc (AMD) would become "cool" again. But things seem to be changing. The good news is that the AMD stock is so cheap right now, that even those of you who didn't rank well at our Financial Assessment could get hands on a good 100+ shares of it. So without further ado, lets conduct a 360 Invest Diva Diamond analysis on this baby.

 

AMD Stock, Advanced Micro Devices, Inc. AMD Stock, Advanced Micro Devices, Inc.

 

1- AMD Stock: History

Only second to Intel, AMD is the second largest semiconductor company that develops two main things: CPUs (Central Processing Units) and GPUs (Graphics Processing Unit). These are two highly geeky computer processors.

Since AMD has two main products, it also has two main market competitors: Intel and NVIDIA.

AMD vs. Intel --- CPU manufacturing

Founders of Intel and AMD all worked for the same company back in 1969; Fairchild Semiconductor. After some weird relationships and competition throughout the years, AMD finally started to kick Intel's butt in 2003 with their ‘Hammer’ processors which let computer makers build servers that could handle complex business tasks. That is when the AMD stock started to rise. AMD’s share price hit a post tech-bust high of $40.54 in late 2006.

In January of 2006 Intel began rolling out what would become a devastating response. Its ‘Core’ line of processors, designed by an Israel-based team sparked panic at AMD, and kicked its butt back. Big time.

Intel continues to be the champ in the CPU field to this day.

AMD vs. NVIDIA --- GPU manufacturing

In 2006 AMD's head got big, as they were crushing Intel. So they decide to expand their manufacturing to GPUs. They bought ATI, a highly talented team of GPU developers in 2006 for $5.4 billion. That is when AMD's competition against NVIDIA began. But it also marks when AMD lost its focus, and its products were not "butt-kicking" anymore.

However the AMD - NVIDIA competition has been a close one. If you ask a gamer "which one is better?" the highly anticipated answer would be "it depends". Over the last decade these two companies have been locked in a seemingly eternal conflict. Whenever one side gained an edge, the other swiftly responded. No video card remained the obvious king for more than a few months in most areas. Although, an area that concerns both gamers and traders is the Bitcoin industry. AMD has been the GPU of choice among Bitcoin miners.

In 2015 it seemed like Nvidia gained a lasting upper hand on AMD. Gamers and AMD stock investors alike took notice: In 2014 NVIDIA gained 11 percent market share entirely from AMD.

That's it for your history lesson. But what's happening now?

 

2- AMD Stock: Current Fundamentals

After getting completely crushed by NVIDIA, AMD seems to finally getting its act together:

  • They hired the right people
  • They split the company back to CPU and GPU
  • Most importantly, they are stepping in a HOT tech space to provide an important element for computers that will be using the latest technology from AlphabetMicrosoft, Sony, HTC, and Facebook: Virtual Reality (VR)

AMD and NVDIA are both in it to provide the critical components that are required to enable the VR revolution in the consumer space.

Since AMD is both in the CPU and GPU market, they are perfectly positioned to reap the rewards from these VR giants as they enter the consumer market. The massive growth in AMD is supposed to come from the consumers who will need to upgrade their computers in order to use Virtual Reality,

 

3- AMD Stock: Technical Analysis

Let’s face it, AMD stock has been mostly a horrible experience for investors. During the past five years alone, it has dropped 71%.

But thanks to tech savvy traders (and overall boost in the market) AMD started showing some life end of 2015. It was crushed again beginning of 2016 due to the negative market sentiment, however considering the above fundamentals, AMD stock is way oversold.

Now that we've crushed the fundamentals, let's see what the technical point of the Invest Diva Diamond suggests for the AMD stock:

Big Picture Monthly Chart: AMD tested the bottom price of 1.6 for the third time since 2009 beginning of this year, however that could easily be attributed to the overall market sentiment and Chinese worries. A boost in the shares could push the prices towards the resistance at 9.0 by the end of the year. In the long run, we could see AMD stock to rally back up to the highs of 2006 at 42.00.

AMD Stock Monthly Chart resistance target levels March 2016 Advanced Micro Devices, Inc. AMD Stock Monthly Chart - Advanced Micro Devices, Inc.

 

 

Daily Chart Market Sentiment: AMD stock broke above the ichimoku cloud again after forming a Double Bottom chart pattern throughout January and February 2016. It also broke above the pivot level of 2.3. With this we have three strong bullish signals in a short time frame as well. Our first target is set at 3.0, followed by 5.0 and 9.0

 

 

AMD Stock Daily Chart Ichimoku technical analysis March 2016 Advanced Micro Devices, Inc. AMD Stock Daily Chart Ichimoku Technical Analysis March 2016

 

Summary: The fundamentals and technical analysis both point to an upcoming rally in the AMD stock. While Advanced Micro Devices, Inc. will be competing with some tough tech companies, gamers are already excited about welcoming it back. The reason why is that more competition could mean cheaper prices for consumers, and better quality.

So as a savvy Invest Diva,  you could consider adding AMD to your stock portfolio while it's cheap, or better yet, get in a tech ETF which includes both AMD, NVDA and Intel. Virtual Reality is the theme of 2016 and any company that is somehow dealing with it, is worth considering from an investing point of view.

Here are the important AMD levels to keep an eye on:

Support Levels Turning Point Resistance Levels
2.3 2.3 3.0
1.6 3.0 9.0

 

I'm also looking at the forex market with US dollar in focus after FOMC kept interest rates unchanged. Join me for an overview this week.

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