Yahoo Finance Why AMD (AMD) Stock Is Trading Up Today
What Happened:
Shares of computer processor maker AMD (NASDAQ:AMD) jumped 9.1% in the morning session after the company reported second-quarter earnings results. AMD materially improved its gross margin this quarter. Its revenue also outperformed Wall Street's estimates, and revenue guidance for the next quarter was above expectations. Notably, the results benefitted from continued demand for its MI300 AI chip, with sales exceeding $1B in the quarter. Moving on, AMD raised its full-year sales projection for MI300 to $4.5B (vs previous guidance of $4B ). On the other hand, its inventory levels increased. Overall, this quarter seemed fairly positive, and shareholders should feel optimistic.
Separately, Reuters reported that the Biden administration is planning to introduce softer trading restrictions related to US companies' export of semiconductors. According to sources, "shipments from allies that export key chipmaking equipment—including Japan, the Netherlands, and South Korea—will be excluded, limiting the impact of the rule. After the initial pop the shares cooled down to $144.75, up 4.6% from previous close.
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What is the market telling us:
AMD's shares are very volatile and over the last year have had 19 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago, when the company dropped 7.7% on the news that Bloomberg reported that the Biden Administration is planning to implement tighter trade restrictions if semiconductor companies continue granting China access to technologies made in the United States. The report follows ongoing trade tensions between both countries, which might raise uncertainty about market dynamics in the semiconductor segment heading into the new earnings season.
AMD is up 4.5% since the beginning of the year, but at $144.75 per share it is still trading 31.5% below its 52-week high of $211.38 from March 2024. Investors who bought $1,000 worth of AMD's shares 5 years ago would now be looking at an investment worth $4,758.
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