Trading AMD's 40% Surge Amid Trillion Dollar Chip Stocks Growth

May 24, 2022 16:32

Semiconductor chips are integral components in most electronic products such as electric vehicles, phones, laptops, robotics and cloud computing infrastructure.  

Management consulting firm McKinsey & Company forecast the semiconductor industry to be worth a trillion dollars by 2030.  

Chip stocks didn’t escape the global stock market rout in the first quarter of this year, leading to some of these companies to be trading at interesting price levels.  

Learn how to trade Advanced Micro Devices (AMD) stock price here.  

Stock: Advanced Micro Devices Inc
Exchange: NASDAQ
Symbol for Invest.MT5 Account: AMD
Date of Idea: 25 May 2022
Time Line: 1 - 6 months
Entry Level: $96.00
Target Level: $134.00
Position Size for Invest.MT5 Account: Max 5%
Risk: High
  • The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.

All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing. 

Why Trade AMD Stock?  

Advanced Micro Devices (AMD) is an American semiconductor company based in California. The company’s products include motherboard chipsets, microprocessors, graphics processors and other types of semiconductor chips.  

According to McKinsey & Company, the semiconductor industry will be worth a trillion dollars by 2030. Around 70% of the growth is expected to come from just three industries which include automotive, data storage and wireless.  

Source: McKinsey & Company, 25 May 2022 

While the semiconductor industry is competitive AMD’s most recent earnings report (Q1 2022) paints an interesting picture. Other highlights from the earnings report from CNBC include: 

  • Earnings per share were up 117% year on year 
  • Revenue was up 71% year on year 
  • $6.5 billion worth of sales is forecasted in this quarter, higher than analyst estimates of $6.38 billion 
  • 71% sales growth in the first quarter of 2022 

In fact, all of AMD’s business segments posted double-digit gains while the company shows it is also winning market share from Intel in the PC industry. There has also been double-digit growth in its semi-custom business due to a rise in consumer demand for the PlayStation 5 and Xbox One. 

AMD also stated that its revenues would have only increased 55% if it didn’t include six weeks of revenue from the acquisition of Xilinx. Even with the impressive earnings report, the stock is down nearly 50% from its record high of $164.46 recorded in November 2021.  

One major factor affecting technology shares is rising interest rates around the world. As this increases borrowing costs it can affect the value of future growth, company valuations and therefore stock prices.  

AMD Stock Forecast - What do the Analysts Say? 

According to analysts polled by TipRanks for an AMD stock forecast in the last 3 months, there are currently 13 buy, 9 hold and 0 sell ratings on the stock. The highest price level for an AMD stock forecast is $200.00 with the lowest price target at $100.00. 

The average price target for an AMD stock forecast is $134.47 which represents a more than 41% upside from current levels, at the time of writing.   

Source: TipRanks, 25 May 2022 

An Example Trading Idea for the AMD Stock Price

An example trading idea for the AMD stock forecast could be as follows:  

  • Buy the stock on a break above $96.00 to allow for current market volatility.
  • Target just below the average analyst price target at $134.00.
  • Keep your risk small at a maximum of 5% of your total account.   
  • Time Line = 1 – 6 months  
  • If you buy 10 AMD shares:  
    • If target is reached = $380.00 potential profit ($134.00 - $96.00 *10 shares).

It’s wise to remember that the share price is unlikely to go up in a straight line and it may even go much further down before it rises, especially considering the recent sell-off in global stock markets.  

Therefore, be sure to exercise good risk management which is one of the most important aspects of trading successfully. You should always know how much you could potentially lose on a trade and the risks involved.  

Another factor to consider is the commission as these can eat into your profits. With the Admirals Invest.MT5 account you can buy US stocks from $0.02 per share. This means buying 10 shares in AMD stock would result in a commission of $0.20 ($0.02 * 10 shares).  

There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall! 

How to Buy AMD Stock in 4 Steps  

With Admirals, you can buy shares in companies like AMD with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks. 

  1. Open an account with Admirals to access the Trader’s Room.   
  2. Click on Trade on one of your live or demo accounts to open the web platform.   
  3. Search for AMD at the bottom of the Market Watch window and drag the symbol onto the chart.   
  4. Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.   

Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance. 

Click on the banner below to buy AMD stock today! ▼▼▼ 

Do You See the AMD Stock Price Moving Differently?   

Remember that all analytics and trading ideas are based on the personal view and experience of the author.  

If you believe there is a higher chance AMD's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.  

The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.  

This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article. 


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Jitanchandra Solanki
Jitanchandra Solanki Financial Markets Author, Admirals London

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.