It has been a hard time for the AMD stock price, which has crashed by over 56% from its highest level in 2024. AMD has plunged to a low of $100, its lowest level since October 2023, giving it a market cap of over $156 billion. This valuation is much lower than its peak of over $335 billion.
AMD is gaining data center share as concerns remain
AMD, once a beloved semiconductor company, has come under pressure in the past few years as concerns about its business continued.
This retreat happened as the company has continued to gain market share in the booming data center industry. With Intel’s business being on edge, AMD has become the biggest competitor to NVIDIA, the biggest chip company in the industry.
The most recent financial results showed that AMD’s business was doing relatively well. Its revenue rose by about 24% to $7.65 billion, while the gross margin rose from 47% to 51%. Its operating margin rose from 6% to 11%. However, the net income dropped to $482 million.
The results showed that its data center business was doing well, helped by products like EPYC, Instinct, Kintex, and SolarFlare.
The data center business performed well in the quarter. Its revenue rose by 69% to $3.85 billion, while the operating income rose by 74% to $1.15 billion.
The challenge, however, for AMD is that its other segments were not doing well. Its gaming segment had a revenue of $563 million, down from $1.368 billion in the same quarter a year earlier. The embedded revenue dropped from $1.057 billion to $923 million.
Analysts expect AMD growth to continue
Most analysts anticipated that the company would continue doing well this year. The average revenue estimate among 35 analysts is that its revenue will grow by about 30% to over $7.1 billion. The highest revenue estimate was $7.46 billion, while the lower estimate is $6.9 billion.
Analysts expect that AMD’s annual revenue will be $31.8 billion, up by about 23.3% from a year earlier. It will then make $38.47 billion next year.
AMD’s earnings are expected to continue doing well. The average estimate is that AMD’s earnings will be 93 cents in the current quarter, followed by 4.7 cents this year. This will be a big increase considering that the company made an EPS of $3.31. It will then rise to $6.33 next year.
Going by AMD’s history, there is a likelihood that its revenue and earnings metrics will be higher than estimates.
The challenge, however, is that there are signs that the AI bubble is starting to burst. A good example of this is the recent NVIDIA earnings. While NVIDIA’s earnings were strong, the company signaled that its growth was slowing.
On the positive side, Wall Street analysts are upbeat about the AMD stock price. The average estimate is that the stock will rise to $148 from the current $100.
AMD stock price analysis
The weekly chart shows that the AMD share price peaked at $226.95 in March. It has dropped from the key support at $163.96, the highest swing in November 2021.
The stock moved below the 50-week and 200-week Exponential Moving Averages (EMA), a sign that bears are in control.
This chart shows that the stock has moved to a low of $93.70, which was the lowest swing in October 2023. Further, the Percentage Price Oscillator (PPO) and the Relative Strength Index (RSI) have moved downwards.
Therefore, the AMD share price is at a crucial support level, where it needs to bounce back. A break below that level will point to further downside, potentially to the support at $54, the lowest swing in October 2022, which is about 45% below the current level. A rebound, on the other hand, will see it bounce back to the key psychological point at $150.
Read more: AMD stock price forecast: it could get ugly soon
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