AMD May Fall Below $20 Again

With markets falling five straight days last week, AMD (NASDAQ:AMD) shareholders cannot expect the stock to break above the $25 level. Last month in February, the stock took a run at $25 only to yield to profit-taking. Last week’s 7% drop below the all-important 50 and 200 day moving average suggests near-term downside ahead for the stock.

Weak PC sales from HP Inc. (NYSE:HPQ) is hardly positive news for AMD. Even though HPQ sold off sharply and fell below $20 for the first time in over a year, AMD and Intel (NASDAQ:INTC) mostly held up. Even Nvidia is range-bound, as markets are willing to hold these chip stocks for the longer-term. For AMD, EPYC sales will continue to do well as will Ryzen chips in the PC space.

The GPU market is an unknown for AMD. Without selling-out Radeon 7, the wait for Navi, which targets the mainstream gaming market, will be the next positive catalyst driving AMD stock higher. Until then (May 2019 or later), Nvidia will dominate the mid-market with the GeForce GTX 1660 Ti. Its less expensive RTX GPUs and last-generation GTX cards will also put pressure on chip prices. AMD is also working through inventory that will hurt ASP and profit margin.

For investors who want AMD stock at below $20, wait for the GPU glut to end.