Why AMD Stock is Overreacting in the Market
AMD, or Advanced Micro Devices, Inc. is a multinational semiconductor business based in Santa Clara, California, which develops high-performance personal computer hardware and other related technology for consumer and business markets.
In spite of having a poor financial record as far as finances are concerned, AMD was able to increase its cash flow last quarter due to the sale of its acquired personal computer chips products. In fiscal year 2021, AMD earned $5.2 billion, which is more than half of what the company made in the last fiscal year. AMD stock is currently valued at about $3.00 per share, which is well below its selling price. This may be due to insufficient funding, however the stock has regained some of its lost ground recently, as investors have become more optimistic in regard to the company’s prospects.
Some investors attribute AMD’s poor performance to poor management; however the fact is that the corporation has not been receiving enough capital from outside investors in order to conduct the operations necessary to remain a competitive company. For example, in the last quarter NASDAQ AMD at https://www.webull.com/quote/nasdaq-amd received cash from two financier organizations, however the amount was only enough to pay for the expenses of the quarter. The majority of the earnings from the last quarter were from selling its acquired items, rather than making purchases of new technology. In addition, despite having adequate cash flow, analysts believe that AMD will be unable to utilize its new technology successfully as it lacks the expertise necessary to compete in the growing personal computer market.
What’s worse, according to analysts, AMD’s lack of ability to compete in the fast-growing high-end personal computer market means that the company is doomed to remain a minor player in the industry until at least the next two years. Meanwhile, other companies like Dell and HP have continued to grow rapidly, and they now represent nearly fifty percent of the overall personal computer market. If AMD cannot come up with innovative new products to replace outdated ones, then it will be destined to stay a minor force in its own industry for decades, if not much longer. This is why many investors have become pessimistic about AMD’s ability to reverse its declining sales in the next few years. However, the stock’s impressive performance during the last quarter may have been a one-time occurrence, and the stock is expected to bounce back in the coming quarters.
Investors are expecting a bounce back, and many on the Street are excited about the prospect of AMD stock rising again. The stock is currently trading just above the psychologically important 20 percent point where it begins to trade above the psychologically important one percent resistance level. If the stock keeps this kind of momentum up to the end of the year, it could easily cross this psychological threshold and start increasing again. Unfortunately, the short-term market psychology of the last few months has scared away many investors from getting in before AMD can reverse their downward trend, and they may not see a return to the stock until the middle of next year, when the gains could be twice as large as they are right now. Before stock trading, you can check its income statement at https://www.webull.com/income-statement/nasdaq-amd.