Advanced Micro Devices Headed For Triple Digits

Advanced Micro Devices Inc. (AMD) is having an outstanding 2020, posting a 105% year-to-date return. Better yet, the stock has finally worked off extremely overbought technical readings incurred during the third quarter’s vertical advance and could break out, lifting into triple digits for the first time in its multi-decade public history. Right now, the sky’s the limit for AMD in 2021, barring unforeseen headwinds.

AMD Capitalizing On Intel Misfires

The chip manufacturer has Dow component Intel Corp. (INTC) to thank for its rising fortunes, with delayed product releases and corporate misfires opening the door for smaller rivals to grab precious market share. New customers are discovering lightning-fast chip sets backed up by glowing reviews, making a return to the old school tech behemoth less likely.  More importantly, INTC is still tripping over its own feet, with no plans to dump ham-fisted management.

President and CEO Lisa Su reiterated her bullish outlook on AMD at Credit Suisse’s 24th Annual Technology Conference on Nov. 30, sharing optimism about the personal computer market and noting new profit opportunities emerging in the near- and medium-term. She also advised the company’s game console portfolio is continuing to while ramp up while they add innovative products in the lucrative graphics and cloud server markets.

Wall Street And Technical Outlook

Wall Street coverage has grown more cautious in reaction to historic share gains, with a ‘Moderate Buy’ rating based upon 13 ‘Buy’ and 6 ‘Hold’ recommendations. One analyst now recommends that shareholders take profits and hit the sidelines. Price targets currently range from a low of $13 to a Street-high $120 while the stock opened Tuesday’s U.S. session about $3 above the median $90 target. Upside may be delayed into 2021, given this elevated placement.

The stock broke out above the 2000 ‘bubble’ high in January 2020 and entered a testing phase that carved an ascending triangle across the contested level. It finally confirmed the breakout in July and took off like a hot rocket, adding nearly 40 points into the September high at 94.28. Rangebound action found support in the 70s in November, yielding an uptick that’s now reached the prior high. Just a small catalyst should be needed at this point to lift price above 100.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.