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2 Factors are Behind AMD’s Rise Ahead of Q4 Earnings Numbers

By:Thomas Westwater

The stock is up more than 100% over the last 12 months, thanks to AI’s need for chips and a broader rally in tech equities

  • AMD plans to report fourth quarter earnings on Tuesday, Jan. 30.
  • Investors are focusing on data center growth and the new MI300X chip set.
  • The company’s stock may require impressive numbers to keep the rally going.

Advanced Micro Devices (AMD), is scheduled to report fourth-quarter fiscal earnings on Tuesday, Jan. 30, after the closing bell, according to a company press release. The stock is up more than 100% over the last 12 months, and up more than 70% from its third quarter numbers, thanks to the excitement generated around artificial intelligence and the chips required to power the technology. A broader rally in technology stocks is helping to lift AMD in January.

What do investors expect from AMD earnings?

Analysts expect to see adjusted earnings per share (EPS) of $0.77 on revenue of $6.13 billion, according to Bloomberg. That would represent year-over-year growth rates of 12.3% and 10%, respectively. Adjusted net income is expected to come in at $1.27 billion while operating profit is seen at $1.43 billion. Overall, these estimates have remained mostly unchanged over the last month.

AMD reports revenue by four separate segments: data center, client, gaming and embedded. Data center commands the largest share of revenue and is expected to post revenue of $2.3 billion, a 39% increase from a year ago. The client, gaming and embedded segments should deliver $1.52 billion, $1.25 billion and $1.07 billion, respectively.

Investors are also keen to hear how its MI300X AI chips are performing. The chipset aims at artificial intelligence data centers in a direct bid against Nvidia (NVDA). The Ryzen 8040 series, designed for personal devices, is also in focus.

Analysts are generally bullish on the stocks, with 40 giving a buy rating, 15 posting a hold rating and only one awarding a sell rating. However, the median price target among those analysts stands at $153.20, which is below the current price of around $168 per share.

Trading AMD earnings

Given the increase in share price over the last 12 months, AMD stock has a lot to live up to. The Feb. 2 options expiration shows an implied move of +/- 13.92 points. That implies an 8.28% move from now until Feb. 2. Per Bloomberg data, the stock price reaction has exceeded the expected move in three of the last eight announcements.

On a technical basis, there isn’t much to suggest that AMD is due for an immediate pullback, although the relative strength index (RSI) is in overbought territory. However, price action hasn’t shown a negative divergence with the oscillator, underpinning a sense of strength for the bull case. Still, regular pullbacks are a healthy part of any rally and traders who are looking to get long might want to wait for one.


Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater 

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