Advanced Micro Devices (NASDAQ: AMD) continues to perplex its shareholders. After flying high in the $12 - $15 range in the summer, the turnaround PC chip supplier closed below $10 (at $9.94) on Friday, December 8. Why is AMD stock down around 7% on the week and in the single digits?
Short-volumes surged from August 2017 (149 million shares) and November 15 (173 million shares). Bears took advantage of CEO Lisa Su’s conservative profit margin and revenue forecast for the next quarter. AMD is rolling out Ryzen for mobile (laptop) markets but won’t realize revenue growth until the holidays at the earliest. Investors will not benefit from a strong earnings report until after this quarter or later. The impatient markets are selling off shares and asking questions later.
Investors selling the stock at a discount may regret it: AMD need only report a better-than-expected profit in the quarter or higher revenue to squeeze shorts. Early signs are positive that EPYC sales will exceed analyst estimates. Hewlett Packard Enterprise (NYSE: HPE) and Dell are only some of the system builders offering EPYC solutions. Microsoft (NASDAQ: MSFT) Azure, JD.com (NASDAQ: JD), and Baidu (NASDAQ: BIDU) are just a few companies building EPYC-powered datacenter solutions.
Despite the bearishness, AMD is attractive at these levels.
