Advanced Micro Devices Inc (AMD:NASDAQ)
Price at Preparation: $165.27 (October 14th, 2024)

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What they do

Advanced Micro Devices, Inc. (AMD:NASDAQ) is a global semiconductor company. It is focused on high-performance computing, graphics and visualization technologies. It operates in four segments.

  • Data Centers: include server central processing units (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), field programmable gate arrays (FPGAs), smart network interface cards (SmartNICs), artificial intelligence (AI) accelerators and adaptive system-on-chip (SoC) products for data centers.
  • Client devices: Include CPUs, APUs, and chipsets for desktop, notebook and handheld personal computers.
  • Gaming: Include discrete GPUs, semi-custom SoC products and development services.
  • Embedded devices: Include embedded CPUs, GPUs, APUs, FPGAs, system on modules (SOMs), and adaptive SoC products. Its products include AMD Ryzen AI, Radeon PRO and AMD Advantage Premium. It also accelerates development and deployment of AI Models on its hardware.

Welcome back to Theta Bandits Top Pick Tuesday, where we strive to bring you relevant free content, searching the markets for new ideas and react to be ahead of what we think could be a new potential winner in any portfolio.

Last week Advanced Micro Devices, Inc. (AMD:NASDAQ) held their AMD event in which they showcased their work and what is new. As usual this event fell into the “buy the rumour, sell the news” with a sell-off happening basically as the event started. The sell-off with an amplitude of about 15-points, did present an opportunity and has since regained roughly 4-points as of this article.

AMD is also coming up on their quarterly earnings reporting (ER) and this usually presents extra volatility. However, if we look at the associated chart below, we can identify a repeating pattern present, which allows plan to be put in place with a good probability of a successful trade.

AMD is second to NVDA in the chip-maker race and the analyst street consensus seems to agree there is a good runway ahead with 45 Buys, 10 Holds, 0 Sells and 12-Month Price Targets (PT) as follows:

  • Low: $135.00 USD (-18.32%)
  • Average: $186.81 USD (+13.03%)
  • High: $250.00 USD (+51.27%)

Plan

As usual, find the chart below with following colors:

  • Blue: 52-week high.
  • Red: 52-week low.
  • Green: 12 Month PTs (high / avg / low).
  • Orange: Support/resistance lines.
  • Yellow: Our plan.

In the chart below, a yellow line depicting a strong base has been highlighted, which even with last week’s event volatility, could not be broken to the downside. With the strength of that support if the price does break below that support line, hopefully it will regain a price above relatively quickly. Also in yellow as mentioned above, around the ER events we see a pattern repeated of a small downturn and followed by a positive run to the upside – This is the movement we want to capture.

AMD’s next quarterly ER is listed for 29th October 2024, we do expect volatility around this event. To get into the trade, one possible method is to leg in – meaning one can buy a third of the position now, a third down at the strong support of $159.21 USD and the last third at a following support line (marked in orange) of either $153.81 USD or $144.24 USD.

Once in the position, keep track of your break-even price. As we always recommend – stop-losses should be set and used to mitigate risk on the position move as per your risk tolerance. Use the orange support/resistance lines to update these as the price moves through the lines. Suggested targets based on the support/resistance lines mentioned would be to secure profit at $174.30 USD, $179.30 USD  and $185.90 USD. Any profit being held after that price can be held to hit the 12-month avg PT of $188.33 USD or above.

This is only one method how to trade this movement. We discuss other potential methods to attack this stock through our discord server and we will discuss this trade live IF you sign up to attend our weekly Theta Bandits Webinar – When we trade together, we learn together!

RISKS

The goal is to grow capital by securing profits along the way and limiting losses. Make sure to plan to trade within your risk tolerance, allowing time for success while updating limits and exit points to mitigate risk.

If you’ve been finding our picks helpful, imagine what trading live holds. You know what to do 👇

Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.

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