AMD Plunges to Critical Support Levels: Is Now Time to Go Long? | Don’t ignore this chart!

Advanced Micro Devices, Inc. (AMD), a leading chip designer, is at a critical juncture that could go in either direction depending on market dynamics and specific industries. The stock’s technical and fundamental indicators are not only mixed, but are showing polar opposite extreme indicators.

Now that AMD’s price has fallen to key levels, bullish investors may be wondering whether it would be wise to buy the dip or avoid the dip.

AMD’s Technology and Fundamental Outlook

AMD’s technical strength is declining rapidly via the StockCharts Technical Rank (SCTR). With a score of 89.9, the chipmaker has bearish scans including P&F Double Bottom Analysis, P&F Descending Triple Bottom Analysis, and ADX (New Downtrend Stock), all available on StockCharts. sample scan library.

Essentially, a glimmer of light came Tuesday when AMD unveiled its latest new processors, the Ryzen Pro 8040 (laptops) and Ryzen Pro 8000 (desktops), designed to power AI-enabled PCs. The company claims that this processor is the most powerful chip for the business. Computing. If AMD performs as expected, the chip could potentially strengthen AMD’s position against rivals Nvidia ( NVDA ) and Intel ( INTC ) in the generative AI space.

What are analysts saying about upside targets? They range from $180 to $270. To be fair, the bearish analyst target is well below the current price of around $110-$120. So even if you’re bullish, consider the downside outlook (and why some analysts may be bearish).

Macro view

While AI technology has been simmering in technological undercurrents for years, the AI ​​arms race was sparked by the launch of OpenAI’s ChatGPT on November 30, 2022. Powered by Nvidia’s powerful GPUs, this watershed moment marked a seismic shift in the semiconductor industry.

Chart 1. AMD Weekly Chart: The blue vertical line marks the week ChatGPT was released to the public, creating an environment of intense competition among chip manufacturers.Chart source: StockCharts.com. For educational purposes.

Many semiconductor stocks fell in late November 2022 due to geopolitical obstacles (limiting U.S. exports to China) and general expectations of an economic slowdown, but this also meant that AMD significantly underperformed NVDA (soon to be the top AI chip producer). This was also the moment when it started to pay off. ).

Compared to NVDA, AMD underperforms by more than -68%. However, AMD outperformed Intel (INTC) by a whopping 731%. Compared to the Dow Jones US Semiconductors Index ($DJUSSC), AMD’s performance is declining, but it still beats the average by 48%. And compared to the S&P 500 ($SPX), AMD’s performance is up 238%.

Looking at technology from a macro perspective, is AMD in a downward trend, or is it in a near-term decline?

Is it time to buy the dip?

Chart 2. AMD’s daily chart. AMD may be seeing a relatively sharp decline, but its momentum, level of support, and underlying story tell a different story. Chart source: StockCharts.com. For educational purposes.

The underlying story driving a potential rebound is more important than technical signs of a bullish reversal. AMD is below support levels of $170 and (below) $165. Both are bearish indicators for the chipmaker.

Relative Strength Index (RSI) It is steadily approaching the 30 level, which marks the oversold threshold. Chaikin Money Flow (CMF) Anything above the zero line is a sign that buyers are now entering the market.

AMD lies just above an important Fibonacci retracement. This explains why more technically inclined buyers have started accumulating shares (the 61.8% to 50% level is often a buying target for bullish traders looking for long-term investments).

How this affects your portfolio

So does that mean you should buy dip? This depends on how optimistic you are about AMD and why you have an optimistic bias. Maybe it’s worth watching if you’re looking to wait for a stronger bounce with greater momentum. AMD is in a buy range, but how you approach accumulating the stock will depend on you and your strategy.

Additionally, AMD’s earnings report will be released on April 30th. Monitor actions taken before and after the report.

conclusion

AMD is at a critical juncture, balancing lukewarm technical signals with promising fundamentals for its latest AI-enabled processors. Difficulties in the broader semiconductor sector following the launch of ChatGPT, triggered by geopolitical tensions and economic fears, constitute AMD’s precarious market position. Whether or not you buy the dip will depend on whether you believe AMD can redefine its competitive advantage, stay ahead of its competitors, and challenge NVDA. AMD is in a buy range, but if you want to invest for the long term, you may want to be more nuanced with your entry. Add AMD to your StockCharts ChartList.

disclaimer: This blog is for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting a financial professional.