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As the second quarter earnings date approaches, should you buy AMD stock?


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June 17, Advanced micro-systems (NASDAQ:AMD) stock has set an unfortunate new high for 2022. With Friday’s close at $81.57, AMD stock is at its lowest point in 2022. It is down nearly 46% so far in 2022 and shares are at prices not seen since last June.

AMD shares have fallen victim to the long list of economic issues that have rocked the markets in 2022. Chief among them are war, rising interest rates, inflation and fear of a recession. Many AMD products — from PC processors to graphics cards and custom chips found in game consoles — could feel the impact if a recession hits and consumers cut spending.

Additionally, PC sales that got a boost during the remote work phase of the pandemic have started to plummet again. AMD may be gaining market share with its Ryzen PC processors, but with that market shrinking, that takes some of the shine out of the achievement.

All of this may not be a strong argument for buying AMD stock.

However, it is not only any technology company. AMD stocks were the best performers of the S&P500 in 2019 and it also showed a very good performance for the next two years. At such a low price, there is plenty of room for gains to return to 2021 levels. The next potential catalyst to kick off a recovery is only a month later, when the company releases its second quarter results ( T2). If your portfolio can use a high-growth stock, AMD stock is a buy at that price — assuming you’re aiming for the long term.

Teleprinter Company Price
AMD Advanced Micro Devices, Inc. $85.08

AMD Analyst Day showed the roadmap to continued growth

How do we know Advanced Micro Devices is positioned to continue to drive growth? It’s not uncommon for a company to post impressive numbers for a few years and then lose momentum when it falls into the cabotage trap.

I have no reason to suspect that AMD is going to rest on its laurels. To drive the point home, the company recently hosted its annual Financial Analyst Day.

There, AMD:

“[…] outlined its strategy to achieve its next phase of growth through the company’s expanded portfolio of high-performance and adaptive computing products spanning the data center, embedded, client and gaming markets.

The company announced architecture roadmaps for new processors, graphics cards and adaptive computing. AMD considers its addressable market to be worth $300 billion. And like Investor Square cAccording to contributor Larry Ramer, the company is confident in its ability to generate annual sales increases of 20%.

With AMD shares worth half of what they were last November, this argues in favor of buying AMD shares.

Don’t neglect the metaverse

Don’t make the mistake of overlooking the metaverse when it comes to AMD, especially in areas like data centers. I’ve written before about how few people mention AMD when it comes to the metaverse. Other tech companies tend to attract attention. But make no mistake, if the metaverse takes off as expected, Advanced Micro Devices will be one of the companies that will benefit the most.

And so will AMD stocks.

Conclusion: Should You Buy AMD Stock?

Through 2022, AMD stock has rallied after earnings. Following the Q4 2021 release in February, AMD shares jumped 14% over the next week. When the company released its first-quarter 2022 results in May — with record revenue — it was a 9% increase in a single day.

However, in both cases the rallies were short-lived. There’s a good chance the same pattern will repeat itself after the company releases its second-quarter results in July.

Whether second-quarter earnings prove to be the catalyst for the recovery this time around or not, AMD stocks at current prices are awfully tempting. You will face some volatility as the economic concerns of 2022 continue to rock the market. However, the long-term growth potential of AMD stock makes it easier to ignore any risk of potential short-term disappointment.

As of the date of publication, Louis Navellier had a long position in AMD. Louis Navellier has held (neither directly nor indirectly) any other position in the securities mentioned in this article. The InvestorPlace research staff member primarily responsible for this article has not held (directly or indirectly) any position in the securities mentioned in this article.

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