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AMD Stock: Analyzing Catalysts and Potential Tailwinds

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Advanced Micro Devices (AMD) stock has fallen again after clocking 52-week highs.

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AMD’s stock performance

A more than 70% rally to a new all-time high affirmed the stock’s impressive run in the first half of the year. However, AMD stock fell in recent weeks. The broader stock market turned bearish amid global recession concerns. The escalating trade war between the US and China continued to fuel the sell-off in the broader stock market.

Amid the recent pullback, AMD stock’s fundamentals are still strong. The company posted a solid third-quarter outlook. AMD also reported impressive second-quarter earnings results, which signaled growth in the core business. While the company’s second-quarter revenues fell YoY (year-over-year), it expects an 18% increase sequentially to $1.8 billion.

So far, AMD stock has been a bright spot in the semiconductor space. NVIDIA warned that its revenues could fall 9% in the third quarter. In contrast, AMD expects a 9% YoY increase.

Ryzen processors’ prospects

In addition to revenue growth expectations, the launch of the 2nd generation AMD EPYC processors highlights AMD’s bright future. The new processors have lower power consumption and record performance. The processors position AMD to battle NVIDIA and Intel for data center customers.

AMD has already attracted deals from Google (GOOGL) and Microsoft (MSFT) for its new EPYC processors. The two tech giants will likely use the 7-nanometer chips to power their data centers due to their enhanced capabilities. Twitter and VMWare have also shown strong interest in the new processors. AMD’s stock sentiments should increase due to growing expectations of increased EPYC processor sales.

AMD stock’s potential tailwinds 

The escalating trade war between the US and China is a major tailwind. The trade war could impact AMD stock’s impressive run. Trade tensions will likely impact AMD’s chip production. The tensions could hurt the company’s demand and sales. The global economic recession could lead to low demand for the company’s new chips. Companies might go slow on new data center constructions.

Due to solid fundamentals and tailwinds, AMD stock has an average “buy” rating. According to Nasdaq, 12 analysts rate the stock as a “buy” while 17 maintain a “hold” on the stock.

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