The AMD stock price has rebounded in the past few months, mirroring the performance of most American equities. After bottoming at $76.55 in April, it has jumped by over 125% to the current $171.70.
AMD earnings ahead
The main catalyst for the AMD stock price will be its earnings, which will come out on August 5. These earnings will provide more color on the artificial intelligence (AI) industry and whether its business is gaining market share from NVIDIA.
The most recent numbers revealed that AMD’s business continued thriving in the last quarter, helped by the AI tailwinds. Its revenue jumped by 36% in Q1 to $7.438 billion.
Its gross margin improved from 47% in Q1’24 to 50%, while its operating margin grew from 1% to 11%. Consequently, its net profit surged by nearly 500% to $709 million.
Most of AMD’s growth came from the data center segment, where it offers GPUs and CPUs. The data center segment revenue rose by 57% in Q1 to $3.7 billion. It cited strong demand for its AMD EPYC CPU and AMD Instinct GPU.
Additionally, the company benefited from the client division, whose revenue rose by 68% to $2.3 billion. It was offset by the deterioration of the gaming and embedded segment, whose sales dropped by 30% and 3%, respectively.
There are signs that AMD’s data center business continued to thrive in the second quarter. For one, its top clients like Meta Platforms, Microsoft, and Google published strong financial results and committed to continuing their AI spending.
AMD’s revenue to grow 27%
Wall Street analysts are optimistic about AMD’s earnings due to its strong data center business. The average estimate is that the company’s revenue will come in at $7.43 billion, up by 27.3% from the same period last year.
The most optimistic analyst expects its revenue to be $7.61 billion. At the same time, the earnings per share (EPS) is expected to be 48 cents, down from 69 cents a year earlier.
A key catalyst for AMD and other chip companies is that the US has allowed them to ship some of their products to China.
This growth explains why the AMD stock price is being valued at a premium. It has a forward price-to-earnings (P/E) ratio of 43, much higher than the industry median of 23. The current stock price is also higher than the average analysts target of $155.
AMD stock price analysis
The daily chart shows that the AMD share price has been in a strong bullish trend in the past few months. It moved from a low of $76.55 in April to the current $171.70.
The stock has moved above the important resistance point at $170, the 61.8% Fibonacci Retracement level. Further data shows that it formed a golden cross as the 50-day and 200-day moving averages crossed each other.
Therefore, the most likely scenario is where it rebounds and moves to the year-to-date high of $182. A move above that level will point to more gains, potentially to $200 in the near term.
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