Why Advanced Micro Devices Stock Is Attractive Right Now
If you’re a casual stock trader, you might think the world was crashing down on us. At the time of this writing, the Nasdaq was down by 34% from its high, and it will likely go lower. A whopping 92% of Nasdaq stocks are below their 50-day moving averages, and 89% of them are languishing below their 200-day moving averages.
If you’ve never experienced a bear market, the current trading action is what it feels like. Essentially, everything sells off.
While it’s obviously not easy to be long on stocks in this market climate, focusing on shares of good-quality companies that have been battered by the selling could pay off when the situation settles down.
Take the case of leading chipmaker Advanced Micro Devices, Inc. (NASDAQ:AMD). The selling capitulation in AMD stock has been horrendous, much worse than that of the Nasdaq.
Advanced Micro Devices stock is down by 50% from its record high of $164.46, which was set in November 2021. AMD stock has dropped by a staggering 43% just in 2022.
While Advanced Micro Devices stock’s November high was inflated and driven largely by momentum, the subsequent scale of the selling has also been excessive. Instead of viewing the selling of AMD stock as a signal to run for the exits, I see it as an opportunity for longer-term investors to accumulate shares of Advanced Micro Devices, Inc.
The company’s fundamental picture hasn’t drastically changed. We’ll obviously see a negative impact from rising interest rates and the risk of a recession, but I view these factors as temporary shocks that Advanced Micro Devices stock will ride out.
Patient Investors Could Be Rewarded by Advanced Micro Devices, Inc.
Advanced Micro Devices, Inc.’s 20-year stock chart shows AMD stock breaking out from major resistance in 2017 after largely drifting in the previous 15 years.
Advanced Micro Devices stock is currently facing some chart congestion. If it fails to hold, AMD stock could move down toward $70.00.
Chart courtesy of StockCharts.com
Flipping to Advanced Micro Devices, Inc.’s share-price action since its March 2020 low, we see the stock rallying and breaking out from an accumulation channel in August 2021.
Advanced Micro Devices stock’s 2021 rally was powered by a golden cross, which is a bullish technical crossover pattern that appears when the 50-day moving average breaks above the 200-day moving average.
Chart courtesy of StockCharts.com
Since moving to its record high in November 2021, AMD stock has been caught in market downdraft.
A death cross pattern emerged in March 2022 when Advanced Micro Devices, Inc.’s 50-day moving average broke below its 200-day moving average.
Advanced Micro Devices stock has broken back below its previous channel resistance and could retest its previous channel and long-term support at $70.00. If it doesn’t hold, AMD stock could further decline toward the $60.00 level. It might be a good idea for investors to jump in at that price.
There’s no secret to avoiding the tech stock selling in the current bearish market, but my view is that considering shares of Advanced Micro Devices, Inc. at a time of price weakness makes sense for longer-term investing.
At this point, Advanced Micro Devices stock is oversold and could begin to attract some buying, which would drive up its price.