Shares of Advanced Micro Devices, Inc. (AMD) have lost around 7% in Nov. 6’s morning trading, despite just reporting strong earnings.
In its third-quarter report released on Nov. 4, AMD posted revenue of $9.2 billion, up 36% year over year, and non-GAAP diluted earnings per share of $1.2, both topping analyst estimates.
“Our record third quarter performance and strong fourth quarter guidance marks a clear step up in our growth trajectory as our expanding compute franchise and rapidly scaling data center AI business drive significant revenue and earnings growth,” CEO Lisa Su said in a statement.
Investment firm Truist raised its price target on AMD to $279 from $273 and keeps a buy rating after the earnings, TipRanks reported.
Truist said some of the imperfections of AMD’s earnings were data center accelerator revenue coming in a bit light in Q3, and operating expense coming above expectations, the analyst wrote, adding that these are “minor issues.”
AMD stock has doubled this year.
AMD stock surged after new OpenAI deal
Despite the recent tumble, AMD stock has soared this year, with share prices doubling amid the artificial intelligence boom.
One recent catalyst is the partnership with OpenAI.
Related: Analyst revamps Amazon stock target after hitting new record
On Oct. 6, The Wall Street Journal reported that AMD and OpenAI had entered into a multibillion-dollar deal under which AMD’s chips will power OpenAI’s AI infrastructure and data centers. Shares of AMD surged 23.71% on that day.
As part of the agreement, AMD has issued warrants for up to 160 million shares as part of the agreement.
Some investors still question the AI bubble and the near-term pace of AMD’s growth. They won’t forget the stock’s lackluster performance between March 2024 and March 2025, when it plunged more than 50% amid margin pressure and tougher competition from Nvidia.
This is what AMD stock needs to go higher
Stephen Guilfoyle, a 30-year Wall Street veteran who now runs Sarge986 LLC, a family trading operation, has been a supporter of AMD.
“There is a lot to like here,” Guilfoyle said in a recent note published on TheStreet Pro. “Sales are hot in all the right places. Margin is fine. Guidance is strong. Cash flows are growing like a weed. The balance sheet is in excellent condition.”
“And they have an all-star CEO, Lisa Su,” he added.
Related: Cathie Wood sells $21.4 million of top AI stocks
Guilfoyle initiated his long position in AMD in December 2022 and now has a return of nearly 300% on the stock.
On the technical side, Guilfoyle said AMD’s momentum indicators suggest the stock may need to cool off, with short-term signals turning bearish after weeks of overbought strength.
“AMD needs to consolidate, and a little sideways trading action would probably be exactly for this stock so that it can take another leg higher,” Guilfoyle wrote.
Guilfoyle says that though he’s not discouraged by the recent weakness, he will not add to his long position just yet.
“I want to see if a trading range develops into a base of consolidation. That would at least provide us with a new pivot,” he wrote.
Guilfoyle reiterated a target price for AMD stock of $302.
Related: Bank of America reconsiders Alphabet stock price target after earnings