Judging by the uptick in short positions, investors appear confident that Advanced Micro Devices (NASDAQ: AMD) stock price drop, triggered by the latest earnings, will persist at least in the short term.
Specifically, the short volume ratio for AMD shares hit a two-week high of 62.60 during the Wednesday, August 5 session, indicating that bearish bets outweigh bullish wagers for the popular semiconductor equity.
Furthermore, the balance is significantly more skewed than the other most recent high – a short volume ratio of 55.15, recorded on July 31 – per the data Finbold retrieved from Fintel on the morning of August 6.
Why AMD stock shorts are on the rise
By press time on Thursday, the bearish bets appear entirely driven by a deterioration of sentiment driven by AMD’s most recent quarterly earnings report, which, despite beating forecasts on all key metrics, led the blue-chip chipmaker’s stock to drop 7.04% from $518.58 to $482.05 within a single session.
Furthermore, the semiconductor giant descended a further 0.99% to $477.30 in the August 6 pre-market, showing the pessimism continues holding sway over big tech shareholders.
Why AMD stock crashed despite strong earnings
Elsewhere, AMD decisively beating Wall Street expectations and, despite significantly increasing it, keeping capital expenditures (CapEx) – otherwise a key culprit in several recent technology sector dumps – has left the question of what is driving the downturn open.
The first prominent theory posits that traders’ hopes were far higher than those of analysts amidst the growing unease over artificial intelligence (AI) return on investment (ROI) and the vast scale of the related buildout, meaning the semiconductor giant in fact underperformed.
Another plausible explanation might be that Elon Musk declared on the same day as AMD reported its earnings that SpaceX (NASDAQ: SPCX) would be using only Nvidia (NASDAQ: NVDA) products.
Will the AMD stock downtrend continue long-term?
Elsewhere, both the fortunes of other technology giants in a similar position to AMD and institutional attitudes in the wake of the quarterly filing signal that the downturn is not to last.
Both Google (NASDAQ: GOOGL) and Meta Platforms (NASDAQ: META) suffered devastating initial crashes after unveiling their own latest financials but have, in subsequent weeks, erased most of their losses.
Simultaneously, Wall Street’s reaction to AMD’s earnings was opposite to the market’s and reinforced the stock’s already ‘Strong Buy’ rating and bullish $635.82 12-month price target.
Featured image via Shutterstock
