Viersen, Germany - May 1. 2021: Closeup of mobile phone screen with logo lettering of amd on computer keyboard
AMD share price is unraveling. It has fallen in the past three weeks straight and is at the lowest level since July 2020. It has crashed by more than 60% from the highest level in 2021. As a result, the AMD stock price has fallen by more than 57% this year and underperformed the VanEck Semiconductor ETF (SMH), which has fallen by 40%.
AMD share price is collapsing, in one of its worst meltdowns on record. This sell-off has been worse than other semiconductor companies. There are several reasons why this is happening. First, the PC market is seeing remarkable contraction.
According to IDC, the PC market is expected to decline by more than 12.8% in 2022 to205.3 million. Demand is then started to start crawling back in 2023. The report said: “With Economic headwinds gaining speed, we expect worsening consumer sentiment to result in further consumer market contractions over the next six quarters.”
Second, AMD share price has also continued falling because of the strong US dollar. The dollar index has soared by more than 20% this year. As a result, while many companies have not increased their prices in dollar terms, the reality is that products have dropped by 20% in foreign currency terms.
Third, AMD stock has fallen after the latest weak results from Micron, one of the biggest semiconductor companies in the world. The firm announced that its demand was slowing and that it had elevated inventory levels.
Finally, analysts have been slashing their outlook for the stock. For example, those at Mizuho, Morgan Stanley, Citigroup, Raymond James, and JP Morgan recently slashed their view on AMD. The most recent downgrade came from Susquehanna, who said:
“Overall, we are cutting estimates for AMD, INTC, and NVDA to reflect our new PC shipment forecast and weakening PC industry checks (and US ban on AI GPUs).”
The daily chart shows that the AMD stock price has been in a strong bearish trend in the past few months. In this period, the shares have formed a descending channel shown in green. It is now along the lower side of this channel. The stock has moved below the 25-day and 50-day moving averages, while the Relative Strength Index (RSI) moved to the oversold level.
Therefore, it seems like the stock has a bearish momentum. As such, the shares will likely continue falling as sellers target the next key support at $50. A move above the resistance at $70 will invalidate the bearish view.
This post was last modified on Sep 30, 2022, 10:40 BST 10:40