As the early September stock market amply demonstrated, the fate of Advanced Micro Devices (NASDAQ: AMD) is closely linked to that of its peers in the technology and semiconductor industry.
Though the stock appeared primed for strong moves as it was widely expected to grab market share from its competitor Intel (NASDAQ: INTC) – a company so badly pressured that it is down 60% in 2024 and that there are rumors it will be removed from the Dow Jones index – and experience something of a renaissance, the last 5 days of trading bore witness to a dire, 5.30% drop.
The situation at press time on September 6 proved a little better, as AMD shares flew like a stone at the day’s opening and are, already in the initial hours of the session, down 3.22% to their current price of $135.01.
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The stock market in general has been infected with a similar selling pressure and other major players in the industry – such as Nvidia (NASDAQ: NVDA) – are themselves down in Friday trading as investors first grew wary and then weary of the U.S. jobs report.
Why is AMD stock dropping?
Investors who are asking themselves why AMD stock is down today can look to the August jobs report – while providing better figures than its predecessor which itself caused a veritable stock market bloodbath – were, nonetheless, weaker than expected. Throughout the eight month of the year, the American economy created 142,000 jobs instead of the 161,000 expected.
The effects of the latest economic figures were made worse by a similarly weak manufacturing report published earlier in the same week. This report caused the stock market to lose more than $1 trillion and Nvidia alone to shed more than $300 billion from its valuation within a single session.
Why is September 2024 proving so bloody for stocks
In general, the ninth month of the year was bound to make investors jumpy, given that September has traditionally offered poor stock market performance and the seemingly endless march of instability-inducing factors expected in the near future.
The chief suspects at press time are the likely interest rate cuts following the upcoming Federal Open Market Committee (FOMC) meeting and the November elections.
Additionally, though the stock market as a whole has been hit hard – the S&P 500 is itself, down more than 1% at press time – the semiconductor industry may be experiencing a particularly strong sell-off as it was, thanks to its otherwise exceptionally strong performance in 2024, the leading actor in a likely and likely dangerous bubble.
Still, AMD stock’s drop can also be identified as an example of contagion given that, unlike the main blue-chip chipmaker, Nvidia, which is 115% in the green in the year-to-date (YTD) chart despite the September fall, it is 2.91% down in 2024.
Is there a silver lining for AMD stock?
While the situation may appear dangerous in the initial trading hours on September 6, many analysts appear less phased than investors. Indeed, only days earlier, Fundstrat’s Tom Lee explained that, though a 7-10% selloff is likely and traders should be cautious, they also ought to be ready to ‘buy the dip.’
Similarly, on September 5, Ryan Detrick, the chief market strategist at the Carson Group, expressed his confidence that the stock market – and, by extension, the U.S. economy – remains strong despite the turbulence and that the current downturn is extremely unlikely to turn into a recession.
AMD stock analysis
As for AMD stock, its recent trends threaten to make a mockery of analysts’ overall bullishness – bullishness exemplified, for example, by the semiconductor company being overall rated as a ‘buy’ without a single ‘sell’ recommendation on the stock analysis platform TradingView.
Advanced Micro Devices shares are, at press time, trading well below their $151.95 50-day simple moving average (SMA) and their $158.56 200-day SMA and are, thus, in a strong downtrend. The stock is also sailing dangerous waters and runs the risk of an even greater fall should it drop under the nearest support levels close to $130 – an event that appears likely given AMD’s early morning performance.
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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.
