- Advanced micro-systems (AMD) AMD stock shows leadership on analyst upgrade
- A Bullish Earnings Trio and a Powerful AMD Bottom Create Significant Upside Opportunity
- Buyers of AMD shares can use a hedging strategy to achieve stronger long-term risk-adjusted returns
Best Semiconductor Game Advanced micro-systems (NASDAQ:AMD) leads the market higher on Tuesday. AMD stock is up nearly 9% on a bullish call from analysts on solid, but more moderate gains of around 2.25% in large-cap, high-component companies technological. Nasdaq.
Brokerage Piper Jaffrey upgraded AMD from “overweight” to “neutral” as part of a broader mixed rating on the semiconductor industry. Analyst Harsh Kumar also raised AMD’s share price target to $140 from $90 per share.
Not that Piper is the only optimist. Advanced Micro maintains a 12-month forward median stock price of $133.95, a high range of $200 and more than half of AMD’s coverage pegged to ‘buy’ recommendations and topping the rankings of today’s outperformance.
Below, let’s take a look at the AMD stock price upgrade and chart and one way investors can participate as more calculated buyers with a tactical spread strategy.
AMD Stock’s Very “Strong” Moderate Buy
In the vernacular of financial markets, an outperform rating is akin to a moderate buy. Jargon falls below a buy rating, a “strong buy” and definitely below CNBC crazy money excitable “Buy! Buy! Buy!” But make no mistake, Piper’s outperformance call is an increase that looks stronger due to its stated price target.
There are plenty of other reasons to consider upgrading from AMD stock as a more certain purchase as well.
The analyst’s move follows AMD’s very bullish earnings triple in early May, which exploded both high and low views and saw management release positive and higher guidance. to views. The review also notes Piper’s concerns that the PC market slowdown and AMD’s acquisition of Xilinx did not “go as planned.”
The outperform rating was also supported by Piper’s acknowledgment that AMD’s core business is performing well, graphics cards are gaining share vs. Nvidia (NASDAQ:NVDA), tailwinds in cloud and enterprise markets are expected to continue as revenue drivers and server chips gain traction against diversified tech giants Metaplatforms (NASDAQ:Facebook), Alphabet (NASDAQ:GOOG) and others.
The upgrade offers a 36.50% rise in AMD shares
Source: Charts from TradingView
Piper Jaffrey sees nearly 50% upside in AMD shares, but that premium has obviously diminished with Tuesday’s bullish reaction. Nevertheless, a promising yield of 36.50% is nothing to turn away from. And for now, stocks remain in position for buyers to make a decent looking technical buy.
Currently and as AMD’s extended weekly view reveals, stocks have confirmed the prior period bullish hammer candlestick formed from the stock’s 50% retracement level from 2018 and its 62 level. % Covid-19 Fibonacci and well above its current uptrend 2018 long-term.
Today, equities further confirm the bottom as equities pull back May’s earnings high relative pullback above its former Covid uptrend.
Finally, with Stochastics lined up and pointing up in neutral territory, the lower Bollinger Band wrapping higher below the hammer candlestick and strong indications of accumulation as stocks bottomed. , a buy in AMD stock is currently in a lot of favor in the price chart. .
How to Buy AMD Stock Smarter
There will always be something that prevents a stock purchase from being a less than perfect investment in real time. And some investors may point to the intact downtrend in AMD stocks or perhaps ongoing macro issues related to Covid-19 or Russia that could disrupt or even dismantle all of today’s preferred supports.
Nevertheless and without putting the bear in front of the wagon, AMD offers a convincing purchase. But with a buy, as a bona fide market leader and growth stock, AMD stock volatility comes with the package. And while $140 looks and feels achievable, even if it is eventually captured, don’t expect periods of price declines to simply go away.
To better prepare or navigate an AMD stock purchase in the face of less attractive but still possible realities, a fully hedged and actively managed equity collar is preferred. This type of strategy can significantly reduce downside exposure, help investors accumulate stocks more efficiently during price weakness, and enable meaningful profits through buy and sell adjustments as stocks rise. and decrease over time.
As of the date of publication, Chris Tyler holds long positions in Advanced Micro Devices (AMD) (directly or indirectly), but no other positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.
Chris Tyler is a former ground derivatives market maker on the US and Pacific exchanges. For additional market insights and related thoughts, follow Chris on Twitter @CAT_Options and StockTwits.