AMD Stock Forecast and News: Advanced Micro Devices likely to fall to $120 this month
- Advanced Micro Devices announced all-stock acquisition of Xilinx on October 27.
- AMD bounced lower off its top trend line last week.
- Weekly RSI is currently at 76, its highest reading in 15 months.
At Friday's closing price of $136.34, Advanced Micro Devices (AMD) shares are up more than 48% year-to-date. This is despite being down 20% in the first half of the year. The most recent swing high last week had AMD stock perfectly bounce off the top line of an ascending price channel. Based on high readings on the Relative Strength Index (RSI), AMD stock appears overextended and is bound for a period of consolidation. AMD stock is trading at $137, up 0.5%, in the premarket at the time of writing.
AMD Stock News: Xilinx acquisition may be growing on investors
Investors are still digesting the news of AMD's acquisition of Xilinx. The all-stock deal was announced on October 27 and would give AMD a majority market share of the complex programmable logic device (CPLD) segment of the semiconductor space. Interestingly, the market did not accept the news with hearty applause, with AMD stock price giving up ground in the following two sessions.
Xilinx would help AMD better compete with Intel (INTC), which controls about a third of the CPLD market through one of its own past acquisitions. AMD executives contend that the $35 billion deal would give AMD a total addressable market (TAM) of $110 billion. Xilinx also gives AMD a greater share of the aerospace and defense industries.
On Thursday, November 4, Microsoft's cloud business, Azure, announced that it would be adding Advanced Micro Devices' 3rd Gen EPYC to its Dasv5 and Easv5 Azure Virtual Machines.
“By using the new Azure Dav5 and Eav5 VMs with the latest AMD EPYC CPUs, customers will get access to leading performance and fantastic price-performance for general purpose and memory-optimized workloads,” said Lynn Comp, corporate vice president of AMD's Cloud Business Unit.
For the third quarter's results, released on October 26, AMD reported revenue of $4.3 billion, up 54% YoY, and diluted earnings per share (EPS) of $0.75 compared with $0.32 in Q3 2020.
AMD key statistics
| Market Cap | $164.6 billion |
| Price/Earnings | 42 |
| Price/Sales | 11.2 |
| Price/Book | 23 |
| Enterprise Value | $161.6 billion |
| Operating Margin | 20.5% |
| Profit Margin |
26.7% |
| 52-week high | $141.22 |
| 52-week low | $72.50 |
| Short Interest | 5.7% |
| Average Wall Street Rating and Price Target | Hold $133.51 |
AMD Stock Forecast: AMD price should ricochet to channel support
AMD stock's Relative Strength Index (RSI) score is currently 76. This places it in the overbought category with a score that is the highest since the week of August 7, 2020. Being that AMD rarely trades this far into overbought territory, it seems more than likely that AMD price will drift lower to find support this month.
One reason to think this likely is that last week's swing high to $141.18 bounced precisely off the top trend line of the ascending price channel. AMD price immediately sold off, meaing the general market appears aware of this level and is acting accordingly.
FXStreet thinks AMD stock price is most likely to fall back to where it began last week – near $120. This price level is key since it has held many weekly opens and closes in the past month. To touch the bottom of the ascending trend line, which still appears to hold sway, AMD stock would need to drop off to just above $110. The demand zone between $110 and $112 has surved as resistance during six separate weeks.
AMD weekly chart
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
