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AMD Stock Could Continue to Climb — It’s Not Too Late to Chase It

Markets are still nervous but AMD stock continues to deliver

By NICOLAS CHAHINE, InvestorPlace Contributor

 http://bit.ly/2TjZY6w

amd stock Advanced micro devices stock

Source: Shutterstock

The semiconductor trade has been a tricky one in 2019. For most of last year, the sector had been under fire, but at least this year we have many big winners. Advanced Micro Devices(NASDAQ:AMD) is one. They reported last night and it’s getting a lot of love this morning. It also helps that Apple (NASDAQ:AAPL) and Boeing (NYSE:BA) stocks are also doing well this morning.

Coming into the earnings I was nervous about the short term reaction that AMD could suffer given what we saw happen to Nvidia (NASDAQ:NVDA) on Monday. On the dip, I wrote about avoiding NVDA since it was two strikes in a row for management and that more pain could be coming.

Today I am suggesting that the AMD rip is the start of more gains to come. Luckily, even though I was nervous about the reaction to earnings, I took a small bullish bet favorable toward the AMD earnings outcome. I sold a credit put spreads to finance buying a debit call calendar. This will pay today.

If you don’t know options, don’t worry. This has nothing to do with today’s setup. It merely says that I come into today with profits in my pocket so I can afford to be brave and chase. Before you label me a perma-bull for AMD, I assure you that I am not. I have also suggesting shorting the stock when it ran to $30 per share. Those trades also paid well.

My thesis today is simple — I am betting that equity markets in general will rally this year, and AMD stock will rally with them. The fundamentals in it are not cheap. This is a stock that seems bloated from the traditional sense, but the story is long term.

We now need technology for every aspect of our lives and under the leadership of Lisa Su, AMD is positioned to grow with the need for tech for decades to come. In other words, for now I focus on growth and valuation is not a concern.

Other Positives for AMD Stock

I have other, shorter-term reasons to believe that AMD is headed higher. Technically, the stock looks frisky even after this spike. This is a ultra-momentum stock so it runs fast in either direction. This also makes it difficult to trade.

Last year the markets struggled and suffered the first loss since the financial debacle — but not AMD. It was up 50% while the rest struggled. This year it shares the spotlight with other like Xilinx (NASDAQ:XLNX). They are up 15% and 30% year-to-date. Compare that to the VanEck Vectors Semiconductor ETF (NYSEARCA:SMH) which is only up about 7%.

This is a fancy way of saying that there is another potential breakout coming. If Advanced Micro Devices stock can rise above $22, it could trigger a buy signal that would invite more buyers into chasing it.

The size of the move could be another $4 from the neckline. So $26 would then be within range, but with potential resistance at $23.50, where it  failed in a big way back in early December.

While the technical reason I cite here sounds short-term and technical, it fits with the overall longer-term fundamental reason to own the shares, so why not start the bet now? If I am long, I stay long and perhaps add a little to my position. If I am starting a new AMD position then I may want to start now and leave some room to add.

Why the caution? We still have to contend with several deadlines looming on the tariff and political fronts. Politicians often have a way of messing up good things. For those who know how to trade options, I’d buy half the shares and commit to buying the rest by selling puts below. This reduces the out-of-pocket expense and gets me long AMD stock now but with room for error. If the stock falls then I’d own the full shares at a discounted entry point.

Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. You can follow him as @racernic on Twitter and Stocktwits.

Why Shares of AMD Are Surging Today

Despite a rough first-quarter outlook, the chip company still foresees revenue growth this year.

Jan 30, 2019 at 12:20PM

What happened

Shares of chip company Advanced Micro Devices (NASDAQ:AMD) soared on Wednesday following a mixed fourth-quarter report. AMD produced less revenue than expected, and its earnings were in line with analyst estimates. The company’s guidance for the first quarter called for a steep revenue decline, but its solid full-year guidance gave investors reason to cheer. The stock was up about 15.2% at 11:30 a.m. EST.

So what

AMD reported fourth-quarter revenue of $1.42 billion, up 6% year over year but about $20 million below the average analyst estimate. Computing and graphics revenue rose 8.6% year over year on the strength of the company’s Ryzen PC processors. The enterprise, embedded, and semi-custom segment posted flat revenue, with growth in EPYC server CPU sales offsetting lower semi-custom revenue.

A rising stock chart.

IMAGE SOURCE: GETTY IMAGES.

Non-GAAP earnings per share came in at $0.08, up from $0.01 in the prior-year period and in line with analyst expectations. Non-GAAP gross margin was 41%, up 7 percentage points from the prior-year period, with the improvement driven by Ryzen and EPYC.

AMD’s first-quarter guidance was downright awful thanks to the bursting of the cryptocurrency bubble. The company expects revenue of $1.25 billion, plus or minus $50 million, which represents a year-over-year decline of 24%. AMD is still working through excess graphics card inventory, and expected growth from Ryzen and EPYC won’t be nearly enough to offset the graphics weakness.

However, AMD still expects to grow revenue in 2019. The company sees high-single-digit revenue growth this year, driven by Ryzen, EPYC, and the company’s data center GPU products. That optimistic full-year outlook is likely what’s driving the stock higher.

AMD will launch a new generation of Ryzen CPUs, built on a 7nm manufacturing process, sometime in mid-2019. The second generation of its EPYC server processors is also coming soon, and AMD is aiming to win a double-digit share of the lucrative data center market.

Growth from the CPU business will need to offset a slumping GPU business. AMD is going to start off 2019 with a steep revenue decline, but it’s betting that a strong second half will more than offset its GPU troubles. With the stock rocketing higher, investors are buying into that story.

10 stocks we like better than Advanced Micro Devices
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David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Advanced Micro Devices wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

*Stock Advisor returns as of January 1, 2019

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Written by top40

Hello Again and Thanks for reading it is I David "Top40" Ellenberger with an update on the status of my lawsuit against Alphabet inc case # 4:20-CV-04877-SVK  and the website and life in general. By now if you regularly visit InternetTop40.com you may have read this section "author info" or Bio. So I am adding to it with more bio and more info. I originally liked the idea of voting on the internet 20-25 years ago when I first got online with WebTV (does anyone remember that?). The technology at that time was not advanced enough to easily be able to vote online or watch videos or much else for that matter but I was hooked and look at what we can do now with videos, IOT, and everything else, but I digress. I started InternetTop40.com about 5 years ago and the user base has been going up steadily ever since. I wanted to be another Facebook, with music and voting and that is all coming together slowly but surely. BTW if you want to help or have any interest please feel free to email me anytime.  Now in my previous Author Info or bio page I made it clear or at least I thought I made it clear, I am personally suing Alphabet inc. in Federal Court for Fraud. I have evidence to prove they are not counting all the pageviews, among other things and defrauding myself and probably millions of other website owners and content creators out of Billions of dollars. So if I wasn't clear or you didn't know it's true I am suing Alphabet inc. in Federal Court for Fraud the case was recently moved from my state of Kentucky to N. California to make it easier for Alphabet inc. to steam roll me or so they think. Needless to say if you are interested and I hope you are you can look the case up online under my name "David Russell Ellenberger" or the case # which is 4:20-CV-04877-SVK.

Now, I want to make it clear to you and everyone that I am not suing Alphabet inc. aka Google for fraud just because I want a million dollars for nothing. I am suing Google for fraud because I think they are committing  a serious crime with worldwide and societal ramifications, it is a  very serious problem.  I am suing Google for fraud because to put it simply the analytics numbers don't add up at least not in my favor or yours, there is something very fishy going on with the Google analytics numbers. Of course Google has an excuse for every one of them but I have reasons and the actual numbers and they don't add up, more about the numbers later. Companies like Google are making Billions of dollars a year in profits telling us data is the most valuable thing and misleading us and misdirecting the media and the world every chance they can.  Now data is valuable and they are making billions in profits seemingly like magic but there is no magic to it just corruption and lies. One thing Alphabet inc. aka Google is really making their money from and that is advertising dollars and they are putting all of this advertising on the websites other people have created. Websites that I have created and  websites you have created and websites millions of others around the world have created websites or content. For example Just writing a text is creating content and that's where Google puts the billions in advertising they receive and keeping most of it for themselves. Yes content others have created and yet somehow they are keeping almost all of these billions for themselves and not distributing it equitably to the real workers the true content creators who actually deserve the advertising monies. Google has made it's billions on the backs of you and me. Think about that for a minute, how can they continue to justify this? They Can't, it has to change.

For example if I were to prevail in the current lawsuit just half of the monies or $20 billion put into a basic account and compounded at 5% annually we could realistically employ over 800,000 people at $24,000 a year, indefinitely.  Sounds unbelievable but its true and if we only employed 400,000 people we could pay them $48,000 a year indefinitely. Its all true. Its simply a matter of having the money and the will to do it. Now is 400,000 people a lot well yes it would be more employees than almost any other company in the world and more than half the population of the entire city of Louisville, Ky.

I David Russell Ellenberger through my website InternetTop40.com am suing Google to try to help right a wrong. A wrong committed by Google that has simply gotten out of hand. Most people may think they can't do anything about it. Nothing can stop Google, the politicians don't care they use all of Googles data to further their own campaigns and line their own pockets while the rest of us keep on creating the content for Google, nothing can be done, this however is not the case, we can do something. The politicians and Alphabet inc. aka Google have done nothing to help society at large other than organize it so they can keep more money in secret and pay off all their buddies with their fraudulently obtained money. It's gotten so bad that the politicians and others in control won't even talk about it, they ignore it and hope it goes away, they won't even try to stop google because it is helping them too much and maybe they are scared of Google or who knows what they may be thinking. But it looks like fraud and it's coming to an end.

I'm telling you we can do something and I David Russell Ellenberger an average citizen Content Creator am saying to you, I'm not scared of Google because I have nothing left to loose.  I David Russell Ellenberger am telling you there is something you too can do, if nothing else, tell all your friends to come to InternetTop40.com aka IT40, believe these words and Create your Content. Further I promise to you and all who read this if I do prevail in my lawsuit against Alphabet Inc. I will use half of any monies I may receive to pay "content creators" a living wage. I pledge to anyone who is reading this, I will use half of any monies I may receive to help those who really do want to work on the internet and create content and tell us what they think. I will use half of any money so you can Get Paid, I want you to get paid for the content you create and get paid everyday and Get Paid to Vote create data and to be able to do this work online and from your home or anywhere in the world you care to be. Because in the words of an ancient scholar Y-O-U are the business Y-O-U are creating all the data, Y-O-U are the content creators and Y-O-U are all that matters.

Now the main thing I want you to take away form this and to know, Alphabet inc. is and has been committing fraud against you, me and everyone who uses the internet. I don't think Google started out to defraud the world it has just degenerated into this endless morass of corruption and fraud and no one seems to care, Well I care and I know you care too.  Sadly Google has been doing this with impunity for years and it is only getting worse. Please don't let them fool you with their lies and obfuscation. Do some research create some content build a website and research the analytics numbers you will find I am right. Google owes you, me and everyone online thousands if not 10's of thousands of dollars for all the data and advertising dollars they have co-opted from you and the rest of the world. So join with me don't use any Google products or file your own lawsuit in federal court against Alphabet inc. I will be glad to help you any way I can and show you how to do it if need be. It will take a sincere effort on your part but it will definitely help your self esteem, society and the world.

Now that's about all I have to say on this subject for now.  I will tell you this if you want more information or you have questions or comments for me, my email is [email protected] Thank you for reading looking and listening and believing in InternetTop40.com Please tell all your friends about us and don't forget to vote Thumbs up or down and refresh your page when your done. oh yeah and those funny old men running for president vote on one of them too or not. One last Thing, I need all the help I can get I am only 1 person but together and with todays technology we can move mountains and reframe society and our world the way we want it to be. Thank you ttyl

 

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