Advanced Micro Devices (AMD) Rockets to All-Time High

Advanced Micro Devices, Inc. (AMD) reports earnings on July 28, with analysts expecting a profit of $0.17 per share on $1.86 billion in second quarter 2020 revenue. The stock fell more than 3% after the semiconductor giant met first quarter estimates and issued in-line second quarter guidance in April, but it bottomed out quickly and settled into a trading range that broke to the upside this week. The stock is trading at an all-time high in the mid-$60s after Dow component Intel Corporation (INTC) pushed out the release of its 7nm-based CPU.

Key Takeaways

  • AMD stock has broken out to an all-time high and could post impressive gains in coming years.
  • Risk into next week’s earnings has increased due to this week’s high-percentage gains.
  • Buying interest needs to play “catch-up” with advancing price.

Cowen upgraded AMD stock last week, lifting its price target to $65, more than $1 below the current price. Analyst Matthew Ramsey reiterated his bullish view, noting “Strong and predictable product execution and server revenue growth remain the most important long-term measuring sticks; we are confident in both. Expect upside to Q3 and FY20 consensus driven by console. Q3 GM percentage likely ticks lower quarter-over-quarter, but strong ex-console year-over-year core margin expansion should continue.”

Valuation marks the biggest risk for market players buying the stock ahead of the report because it has rallied more than nine points in the past two sessions, setting a high bar for continued upside. Wall Street consensus adds to this cautionary view, with the advance lifting price well above the median $58 target and just $5 below the Street-high $71 target. As a result, interested investors should hope for additional upgrades and price target increases heading into the earnings news.

Valuation is the analytical process of determining the current (or projected) worth of an asset or a company. There are many techniques used for doing a valuation. An…

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