Advanced Micro Devices Looks Poised for a Run
Advanced Micro Devices

Advanced Micro Devices Looks Poised for a Run

Apparently, investors are over worrying about the Federal Reserve and interest rates … that didn’t take long.

Savvy investors should strongly consider buying Advanced Micro Devices (Nasdaq: AMD) for a quick trading opportunity.

Shares of the fabless semiconductor firm look poised to reach a new high in the near term.

This isn’t the first time I’ve talked about AMD.

When AMD reported its second quarter numbers at the end of July, they were a blowout. Revenues increased 99% from a year ago to $3.85 billion. And that startling number was a beat of previous guidance that was increased only a few months previous. For the rest of this year, executives now expect sales to increase 60% from 2020.

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The Santa Clara, California-based company is winning key customers.

CEO Dr. Lisa Su told analysts during the Q2 earnings call that half of the world’s newest supercomputers are now using its EPYC central processing units. Alphabet (Nasdaq: GOOGL) is using the CPU at its massive data centers for cloud computer applications.

And there is another catalyst: AMD shares have been weighed down by worries its acquisition of Xilinx (Nasdaq: XLNX) might get nixed by China. The Chinese — like other global governments — can thwart such deals on the grounds of antitrust or other factors deemed detrimental to national interests.

Before the open Monday, shares of Xilinx rose sharply after the Chinese approved the Analog Devices (Nasdaq: ADI) merger with Maxim Integrated (Nasdaq: MXIM). Investors are clearly betting the Xilinx deal will get the green light, too.

Adding Xilinx to the AMD portfolio provides another avenue of attack on Intel. Xilinx is a leading maker of field programmable gate array chips, a market that is growing quickly as 5G communication networks are built out all over the globe.

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AMD shares trade at 35.8 times forward earnings and 9.8 times sales.

Here’s AMD’s one-year chart:


 

The stock reached $122.49 in early August following the Q2 results. Shares are currently trading around $108.20.

Savvy investors should use near-term weakness as a buying opportunity.

Best wishes,

Jon D. Markman

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