The share price of Advanced Micro Devices (NASDAQ: AMD) is experiencing bearish sentiment in the short term, with technical indicators pointing to possible further losses ahead.
Interestingly, AMD closed the August 14 trading session with a modest drop of almost 0.3%, trading at $140. The equity has traded in the red in recent months, plunging over 20% in the last six months. However, the stock attempted to recover on the weekly chart, gaining over 6%.
Implication of AMD’s death cross
As the equity attempts to find stability, AMD stock has formed a death cross for the first time since March 2022, according to data shared by Barchart in an X post on August 15. This technical pattern, where the 50-day moving average (MA) crosses below the 200-day MA, is often seen as a bearish signal by market analysts and traders.
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The last time AMD shares experienced this pattern, its shares plummeted by more than 50% over the following seven months.
Notably, the pattern is significant because it reflects a shift in momentum where the short-term trend has weakened to the point that it has fallen below the long-term trend. This shift can indicate that bearish sentiment is overtaking bullish optimism, leading to further selling pressure.
Given that the tech company lost significantly during the last death cross, this historical context is crucial as investors and analysts seek to gauge whether current market conditions might lead to a similar outcome.
Investors will examine key fundamentals that could counteract the possible downturn the death cross formation initiated. For instance, in addition to the company’s bet on artificial intelligence (AI), new data indicates that AMD is gaining significant market share in the CPU market, dominated by players like Intel (NASDAQ: INTC).
A Bernstein report indicated that AMD sustained momentum in the notebook CPU segment during Q2 2024, bringing its total share to approximately 20.3%. This surge in market share was accompanied by a corresponding rise in revenue, which hit $5.8 billion for the just-ended quarter.
Wall Street analysts take on AMD
In the meantime, 31 Wall Street analysts at TipRanks project AMD will likely experience significant growth in the next 12 months. A majority of the analysts who have maintained a ‘strong buy’ rating for the stock predict that the chip maker will rally 35% from the current price to hit an average price of $190.63 in the next 12 months.
The experts have set a high target of $250 and a low target of $150.
Overall, it’s worth noting that although the AI stock has a death cross, which is a bearish signal, it does not guarantee a prolonged downtrend. Market dynamics have evolved since 2022, and AMD’s business fundamentals remain strong, with continued innovation in its product lineup and a solid foothold in key markets.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
