AMD Stock Crossed $29 before Its Q1 Earnings



Advanced Micro Devices

Advanced Micro Devices (AMD) started April on a strong note. A DigiTimes report, citing industry sources, stated that TSMC (TSM) sees strong demand for its 7nm (nanometer) chips from Advanced Micro Devices and Huawei’s HiSilicon in the second quarter. The news sent Advanced Micro Devices stock up 8.5% above $29 on April 3.

Advanced Micro Devices stock crossed $29 for the first time since early October 2018. Before 2018, the stock reached the price range in 2006 when its Opteron processor helped it gain 20%–25% server CPU market share. At that time, Advanced Micro Devices stock reached $39.51.

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Advanced Micro Devices gains ground

For Advanced Micro Devices, 2019 is an important year. The company is taking the manufacturing process lead with TSMC’s 7nm process node. Intel (INTC) is struggling to bring its 10nm process node to volume production. In 2019, Advanced Micro Devices aims to gain a decent server CPU market share from Intel, which has been commanding more than 95% market share for years.

The report from DigiTimes about high demand for TSMC’s 7nm chips from Advanced Micro Devices revived investors’ confidence in the company’s 7nm Ryzen, Radeon, and EPYC processors. Until now, Advanced Micro Devices’ strategy to gain market share has been to offer better performance at a lower cost compared to Intel’s products.

Advanced Micro Devices claims that its new Zen2 CPUs will be based on TSMC’s 7nm node. The new CPUs have architectural improvements that will help deliver better performance and power efficiency than Intel. Intel’s new management is more focused on optimizing costs. Intel might not resort to price competition to fight Advanced Micro Devices. As a result, Advanced Micro Devices will have some room to increase its ASPs and improve its margins.

All the above factors have made investors optimistic about Advanced Micro Devices. The stock is overbought with an RSI (relative strength index) above 70 on April 3. The RSI measures investors’ sentiment by looking at the trade volume. An RSI of 70 and above indicates that the stock is overbought. Advanced Micro Devices stock has corrected slightly from the 52-week high. The next big growth will likely come on April 30 when the company is expected to announce its first-quarter earnings.

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