Why AMD (AMD) Stock Is Trading Up Today

Max Juang /
2024/01/16 11:24 am EST

What Happened:

Shares of computer processor maker AMD (NASDAQ:AMD) jumped 5.8% in the morning session after it was named a "Top Pick" in Barclays' list of favorite stocks for the "2nd Wave of AI." Barclays also raised its price target for AMD's stock from $120 to $200. The new price target indicates more than a 30% premium compared to where shares traded when the upgrade was announced. The list also featured other semiconductor stocks like Coherent (NYSE:COHR), NXP Semiconductors (NASDAQ:NXPI), Western Digital (NASDAQ:WDC), and Camtek (NASDAQ:CAMT).

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What is the market telling us:

AMD's shares are very volatile and over the last year have had 22 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 8 days ago, when the company gained 5.2% after investors bought the dip with the technology sector, as yields fell. The yield on the 10-year Treasury yield, meanwhile, lost nearly 4 basis points. Other than potential positioning and a bounce after a losing week, there was nothing more specific. During the week, traders were expected to get greater clarity into the path of rate cuts from the central bank. The December 2023 consumer price index was set for release, followed by the producer price index. 

In addition, the company announced the AMD Radeon RX 7600 XT graphics card ahead of CES (Consumer Electronics Show) 2024. The graphics card promises seamless gaming experiences at 1080p and beyond with features like AMD FidelityFX Super Resolution and HYPR-RX. It is also targeted at content creators to improve productivity and quality. In a market landscape where AI-powered tech solutions are gaining traction, presenting opportunities for increased productivity and growth, AMD appears to be positioning to capitalize on this trend.

AMD is up 14.2% since the beginning of the year. Investors who bought $1,000 worth of AMD's shares 5 years ago would now be looking at an investment worth $8,023.

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