What’s the bull case for AMD ahead of the quarter earnings?

By:
on Jul 27, 2022
  • AMD reports earnings on August 2 amid supply chain woes.
  • The stock has lost 43% of value YTD despite recovering lately.
  • The quarter results could offer a trigger for a potential breakout for AMD.

Advanced Micro Devices, Inc (NASDAQ:AMD) stock is closely watched ahead of the earnings. With a drop of 43% year-to-date, the earnings will indicate whether it is now time to buy the dip. We urge patience as key bull triggers are still to surface for AMD.

There is no doubt about the long-term viability of AMD. Semiconductor demand will continue to soar and boost firms in the sector. Industry estimates put the valuation of the global semiconductor market at $1 trillion by 2030. With a forward P/E ratio of 19.4 against the trailing PE ratio of 40.7, investors hold high regard for AMD.

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AMD’s long-term prospects are there, but the current sector supply issues are an Achilles’ heel. Prospects of further economic tightening also impact the semiconductor demand in the near term. We believe investors should wait for the quarter results to assess the bull case amid a potential breakout. 

AMD hits a descending trendline as price remains above $74 support

Source – TradingView

Technically, AMD has hit a descending trendline after escaping the bottom at $74. We expect the stock to slide again towards the $74 support as it lacks a bullish trigger. Currently, the stock is predominantly along a descending triangle. A breakout above could usher in a bullish reversal. A break below the $74 support is also possible if quarterly earnings disappoint. 

Ahead of the quarterly earnings, Zacks Investment Research analysts have a consensus of $0.94 per share. The earnings are greater than the $0.58 reported last year. An earnings beat could trigger a bullish breakout and offer a chance to buy the stock. 

Summary

AMD is bearish and could break out soon depending on the quarter results on August 2. Investors should wait for the earnings before considering a buy at $74.

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