Is it time to invest in AMD as BofA issues a technical buy call amid the crypto boom?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 24, 2021
  • Advanced Micro Devices shares have added nearly 20% in market value over the last three weeks.
  • The currency rally is driven by rising cryptocurrency prices.
  • BofA thinks AMD’s links to crypto could boost its stock price higher in the coming months.

Advanced Micro Devices Inc. (NASDAQ: AMD) shares have surged nearly 20% over the last three weeks amid rising cryptocurrency prices. The company offers the combination of Central Processing Unit (CPU) and Graphics Processing Unit (GPU) technologies to make blockchain transactions increasingly faster and more secure. 

As a result, Bank of America thinks its links to the bullish cryptocurrency market could boost short-term growth. The firm says the AMD stock has the potential to rise to $138, or even higher to $150 per share amid the current crypto rally.

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Ranking AMD among the firm’s top picks for stocks technically exposed to crypto and digital assets, BofA’s Securities Technical Research Strategist Stephen Suttmeier wrote:

We previously flagged AMD as a vulnerable stock in late April, but the stock never decisively broke down and become more positive on a move back above its [weekly] MAs in late June/early July.

AMD’s exciting growth

Advanced Micro Devices’ exposure to the digital assets market gives it exciting growth prospects. As a result, analysts are predicting earnings per share growth of more than 600% this year and an average annual growth of about 32.44% for the next five years.

Therefore, given its reasonable forward P/E ratio of about 39.08, the stock could gain the attention of long-term growth investors.

Source – TradingView

Technically, AMD shares seem to have recently rallied to trade in the overbought conditions of the 14-day RSI. As a result, the stock just set new all-time highs, triggering a short-term pullback.

Therefore, although the stock offers an exciting outlook amid links to crypto, it may be time to take some profits. As a result, investors could target potential pullbacks at about $112.41, or lower at $104.35, while $127.36 and $134.81 are crucial resistance zones.

Will profit-takers swoop in?

In summary, AMD shares seem to have rallied to set new all-time highs advanced amid the crypto rally. Therefore, given the inevitable volatility of crypto prices, it could be time to take some profits ahead of a potential pullback.

However, long-term investors may choose to wait out the turbulence.

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