Though multiple semiconductor stocks have been the superstars of 2024, and despite Advanced Micro Devices (NASDAQ: AMD) offering a strong performance in the initial months of the year, it has fallen deep into the red in more recent trading.
The dire circumstances have, however, not deterred investors and analysts, and throughout its fall, AMD stock may have been setting up for a significant bull run. Specifically, a prominent investor and technical analyst on X, Jake Wujastyk, believes the semiconductor giant has been forming a falling wedge in recent trading.
A falling wedge is a chart pattern that tends to signal that the downward movement of an asset is losing momentum. Therefore, it is generally seen as a bullish signal.
In his December 17 post, Wujastyk noted that the most recent AMD candle is right at the apex of the formation – where it is narrowest – indicating that a bullish breakout is likely imminent.
Additionally, the analyst opined that a ‘rip’ – a decisive upward move – is in the cards and that it could rapidly lead to a 5-10% rally for Advanced Micro Devices shares. Still, he warned in the comments that a surprise downward move is also plausible.
Why the AMD stock bullish breakout isn’t guaranteed
Wujastyk’s warning, at press time in the early hours of the Wednesday session, appears more accurate than the bullish forecast, as AMD stock’s initial moves can best be described as indecisive.
Indeed, the 0.26% rally evident on December 18 hardly constitutes the forecasted ‘rip’ and hardly puts a dent in the chipmaker’s 9.62% year-to-date (YTD) decline that took its price to $125.25.
Wall Street analysts weigh in on AMD stock’s prospects
The lack of a clear upward move can be explained by some of the root causes of the ongoing slump. For example, when Bank of America’s (NYSE: BAC) Vivek Arya downgraded AMD stock from ‘buy’ to ‘neutral’ and assigned a 12-month price target of $155, he outlined the strong headwinds the firm is facing.
There is a significant fear of market share loss as, despite Advanced Micro Devices’ strong presence with firms like Microsoft (NASDAQ: MSFT), Meta (NASDAQ: META), and Oracle (NYSE: ORCL), the three giants are expected to invest heavily into a pivot toward Nvidia’s (NASDAQ: NVDA) Blackwell.
Similarly, there is a growing cloud preference for Marvell’s (NASDAQ: MRVL) and Broadcom‘s (NASDAQ: AVGO) custom chips, which serves to further limit AMD’s growth potential, as reported by Finbold on December 10.
The other most recent revision – that of Truist Securities – likewise lowered the price forecast from $156 to $145 while maintaining a ‘hold’ rating.
Featured image via Shutterstock
