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Should You Buy Shares In This Highly Profitable Company?

Decades ago most PCs had an “Intel Inside” sticker on them, but AMD (Nasdaq: AMD) was there too. Growing past its underdog status, AMD has grown to become a force to be reckoned with in the global computing hardware market.

For example, per UL industry standards, the AMD Ryzen 9 5950X is considered to be the #1 desktop processor.

Short-term, AMD has benefited from the semiconductor-shortage but compared to its competitors such as Nvidia or Qualcomm, it has a more diversified product portfolio.

The company itself states that its goal is to “Build a best-in-class growth company” and the recent financial results confirm they are living up to this statement.

Q2 saw a massive +99% revenue increase y/y and the positive trend looks promising.

(source: AMD Financial Results)

AMD already is a highly profitable company, and on top of that, there are still potential positive catalysts in the pipeline that could boost the stock price even further.

One example being the deal with Samsung announced back in 2019, indicating that AMD is about to make a major move into the massive cell phone market.

Another one is the launch of their next-generation Zen 4 chip to be released in 2022 which is rumored to increase instructions per cycle (IPC) by over 25% which would make it one of the smallest and highest performing chips available.

Technical Analysis

AMD stock chart 2ndskies

After breaking out of a multi-year-range back in 2016, the share price of AMD has soared by an astonishing 1000% in the last 5 years.

Following the Q2 earnings report, price broke out to new all-time highs on strong volume.

With the price action suggesting very little to no downside at the moment, stock investors looking to acquire shares of AMD likely will have to be content with buying on smaller pullbacks.

Based on all the above, we think that investors looking to boost the tech-part of their long-term portfolio should take a closer look at AMD. Pullbacks towards the broken resistance zone between $94-$99, which now should act as support, looks like a good area to start building a long-term position in our opinion.

Option Positioning

Currently there are a robust 1.6M calls and 1.4M puts in the market with 23% of those options rolling off this Friday. Those options traders are likely taking advantage of the recent breakout and should be monetized before Friday. This will likely create a pullback and potential buying opportunity, so stay tuned for updates.

FULL DISCLOSURE: Chris Capre currently has no stock or option position in AMD, but he does have a pending limit order to buy. If you’d like to learn more about Chris’s trades and positions, you can get access via the Trading Masterclass where he shares his live trades, further investment ideas and daily market analysis.

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