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Should you buy AMD or Texas Instruments stock after Q3 results?

on Oct 27, 2021
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  • On Wednesday, AMD shares rallied 2% while Texas Instruments shares plunged more than 5%.
  • Both companies reported their fiscal Q3 results Tuesday after markets closed.
  • AMD outperformed expectations while TXN posted mixed results.

On Wednesday, Advanced Micro Devices Inc. (NASDAQ:AMD) shares gained more than 2% after announcing better-than-expected quarterly results. On the other hand, fellow semiconductor company Texas Instruments Inc. (NASDAQ:TXN) plunged more than 5% after delivering mixed Q3 results. So, which is the better semiconductor stock to buy?

Advanced Micro Devices

From an investment perspective, Advanced Micro Devices shares trade at steep trailing 12-month and forward P/E ratios of 44.90 and 41.53, respectively. However, analysts expect its earnings per share to grow by nearly 605% this year before rising at an average annual rate of 32.44%.

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Therefore, although the stock seems expensively valued, it could be an attractive option for growth investors. 

Source – TradingView

Technically, AMD shares seem to have recently spiked into the overbought conditions of the 14-day RSI. As a result, investors could target short-term pullbacks at about $119, or lower at $111.25.

On the other hand, if the rally continues, the stock could find resistance at about $133.63, or higher at $140.77.

Texas Instruments

Texas instrument shares plummeted on Wednesday pushing its P/E ratio to 26.18. In addition, its forward P/E ratio of about 22.37, make the stock a compelling option for value investors.

However, with analysts forecasting EPS growth of about 14% this year and an average of 105 over the next five years, growth investors could opt for alternatives.

Source – TradingView

Technically, Texas Instruments shares seem to have plunged to complete a downward breakout from an ascending channel formation. As a result, the stock has fallen closer to the oversold conditions of the 14-day RSI.

However, given the current bearish bias in the market, TXN shares could plummet deep into oversold conditions. As a result, investors could target extended declines at about $182.87, or lower to $178.48, while $191.94 and $196.34 are crucial resistance levels.

AMD looks like the better buy

In summary, although Texas Instruments shares have recently plummeted resulting in a more exciting valuation multiple, AMD offers a compelling growth outlook, thus making it the better buy after the recent quarterly results.