Usman Salis
Advanced Micro Devices (AMD) stock dropped post-earnings, reflecting mixed investor sentiment on data center growth forecasts and revenue projections.
AMD's Post-Earnings Drop and Analyst Reactions
Advanced Micro Devices (AMD) saw a sharp drop in after-hours trading on Tuesday, following its Q3 earnings report that fell short of expectations. Despite achieving record data center revenue, the company issued a cautious revenue outlook for the next quarter. During the earnings call, AMD CEO Lisa Su indicated that data center revenue is now expected to surpass $5 billion in 2024, an increase from the $4.5 billion forecasted in July.
While AMD shares have risen 13% year-to-date, the after-hours reaction suggests that investors anticipated more robust gains amid the ongoing demand for AI infrastructure. Shares fell 7.6% to $153.57 in after-hours trading, signaling potential investor disappointment.
AMD’s Descending Channel Pattern
AMD’s weekly chart shows that the stock has been trading within a descending channel since reaching an all-time high (ATH) in early March, marked by an inverted hammer pattern. Recently, AMD’s price approached the upper trendline of this channel, though trading volumes suggest a cautious market stance ahead of the earnings report.
Following the earnings miss and subsequent sell-off, traders now closely watch several key support levels. Continuing the downtrend could mean significant resistance in AMD's path to recovery.
Key AMD Support Levels to Monitor
The first major support level for AMD sits near $162. With Wednesday's trading potentially opening below this level, investors may look for the bulls to defend this area, tied to a trendline formed with the November 2021 peak and other recent trading ranges.
A breakdown below $162 could see AMD shares slide further, with the next support target at $132. This level correlates with previous swing highs and lows, specifically around the June and August price movements. A further decline to $112, roughly 33% below Tuesday’s close, could come into play, as this level aligns with the 200-week moving average and historical price points dating back to August 2021.
Should AMD regain momentum, the technical analysis points to a bullish price target of around $275. This projection leverages a bars pattern, replicating the trend from October 2023 to March 2024 and applying it from August’s low.
Conclusion
As AMD aims for ambitious growth in data center revenue, investors are weighing both the short-term challenges and the company’s long-term potential in AI and semiconductor markets. With significant price levels and technical indicators to monitor, AMD’s future performance will be critical for tech sector investors.
Usman Salis
