Advanced Micro Devices Stock Takes a Breather After Weak Guidance

AMD's Q3 revenue forecast fell short of expectations

Managing Editor
Jul 31, 2019 at 10:02 AM
facebook twitter linkedin

The semiconductor sector is in focus this morning, after Advanced Micro Devices, Inc. (NASDAQ:AMD) reported second-quarter earnings last night. While the chip name's earnings and revenue were in-line with expectations, its third-quarter guidance of $1.80 billion came in lower than the $1.95 billion expected due to lower demand for chips used for gaming. 

Analysts have rushed to chime in on the stock. Three brokerages have issued price-target hikes, the highest coming from Jefferies to $40 from $34, who noted that AMD has been executing its product cycle. However, Craig-Hallum cut its rating on the chip stock to "hold" from "buy," and Mizuho trimmed its price target to $36 from $37, citing competitive pricing from Intel (INTC). 

At last check, Advanced Micro Devices stock is down 8% to trade at $31.17, on track for its worst single-session drop since Jan. 28. AMD still boasts a 77% lead in 2019 though, and nabbed a 13-month peak of $34.86 on July 16. However, today's pullback appears to have breached support at its 50-day moving average, a trendline that caught a June pullback.

Echoing today, analyst sentiment is pretty evenly skewed. Of the 20 brokerages covering AMD, 11 rate it a "hold," and nine rate it a "buy" or better. Plus, the security's consensus 12-month price target of $32.39 is a discount to last night's closing perch of $33.87. 

Meanwhile, AMD has had a tendency to make bigger moves than what options were pricing in over the past year. This is per the stock's Schaeffer's Volatility Scorecard (SVS) reading of 85 out of 100, meaning buying premiums on the stock has been an attractive strategy for options traders.


If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners