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From the first week of November onwards, AMD – a company that often gets overshadowed by the outsized interest exhibited in fellow chipmaker NVIDIA – has witnessed strongly bullish share price trends. The initial headwind for this was the unusually upbeat 2024 sales forecast by CEO Lisa Su on October 31st wherein it was stated that annual sales of more than $2 billion is being expected, with the company’s MI300 chips (designed to compete against Nvidia’s H100 chips) expected to bring in $100 million in the current quarter alone. That would make the MI300 the fastest product to ramp to $1 billion in sales in AMD's history.
The second headwind came from a report by PC component market specialist Mercury Research, which contended that AMD had gained both client and server CPU market share in both quarter-over-quarter and year-over-year terms in Q3 2023.
Major CPU suppliers AMD and Intel had largely normalized sales trends in Q3 2023 as PC makers started to purchase processors for back-to-school and holiday seasons, whereas server makers ramped up production of machines based on the latest EPYC and Xeon platforms. In Q3, however, AMD’s gains had largely been at Intel’s expense.
The company’s server component sales has been primarily underlying factor behind recent headwinds: while AMD’s market share growth has been largely flat in the mobile and desktop space for over 3 quarters, the company’s server market share has witnessed a rapid ascent over the past two quarters.
Thus, major market participants seem to be concluding that the company has been carving its niche in the server space against Intel in the near term while laying enormous confidence in its ability to do the same against NVIDIA over the course of the next four quarters.
Over the past two full weeks, i.e. Week 45 ending November 11th and Week 46 ending November 19th, AMD’s share price has been seen marching largely in lockstep with that of NVIDIA. In Week 45, AMD rose four places to be 4th in yet another week of stock market directionality dominantly dependent on tech convictions:
Week 46 saw a massive rally into chipmaker stocks – at some expense to nearly all other tech stocks and despite a drop in overall market momentum – that even shook Intel’s stock price out from the doldrums.
With respect to AMD in particular, analyst consensus presently rests on the contention that both revenue and earnings will see a steady rise all the way through 2025 – which is yet another headwind into the stock’s price trajectory.
All in all, tactical opportunities abound as market breadth vanishes and traded volumes decline while residual conviction piles on into a select number of stocks. With respect to AMD, professional investors can lock into gains-boosting leveraged plays on the upside via AMD3 while a short position can be initiated without margin concerns via AMDS.
Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.
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