2024-10-30 15:15:04
Key Takeaways
- Advanced Micro Devices shares moved sharply lower in extended trading on Tuesday after the chipmaker reported third-quarter earnings that came in below expectations and issued a light revenue outlook.
- The stock has rallied into the upper trendline of a descending channel, though lower volumes suggest that larger market participants remained on the sidelines ahead of the company’s quarterly results.
- Investors should watch key support levels on AMD’s chart around $162, $132, and $112.
- If the stock resumes its longer-term uptrend, investors should monitor a bars pattern bullish price target around $275.
Advanced Micro Devices (AMD) shares moved sharply lower in extended trading on Tuesday after the chipmaker reported third-quarter earnings that came in below expectations and issued a light current quarter revenue outlook, despite record data center revenue.
During the company’s conference call, CEO Lisa Su told analysts that the chipmaker now anticipates data center revenue to exceed $5 billion in 2024, up from her July forecast of $4.5 billion, However, the stock’s afterhours decline indicates investors could have been looking for more amid insatiable artificial intelligence (AI) infrastructure demand.
AMD shares have gained around 13% year to date as of Tuesday’s close, underperforming the tech-heavy Nasdaq index’s return by about half over the same period. The stock fell 7.6% to $153.57 in after-hours trading Tuesday.
Below, we analyze the technicals on AMD’s weekly chart and point out important post-earnings price levels that other investors may be watching.
Descending Channel
After an inverted hammer marked AMD’s all-time high (ATH) in early March, the stock has traded within a textbook descending channel.
More recently, the price has rallied into the pattern’s upper trendline, though lower volumes suggest that larger market participants remained on the sidelines ahead of the company’s quarterly results.
Amid the stock’s projected post-earnings sell-off, let’s look at key support levels that may come into play and also forecast a chart-based price target to watch if the shares resume their longer-term uptrend.
Key Support Levels to Watch
The first important support level to monitor sits around $162. Although the stock sits poised to open below this area on Wednesday, it’s worth watching if bulls make an attempt to defend a trendline linking the prominent November 2021 peak and a range of comparable trading levels within the descending channel.
A decisive breakdown below this level could see the shares decline to the $132 area, a location where investors may look for buying opportunities around a series of prices situated near the June swing high and August swing low.
Further selling in the stock opens the door for a fall to around $112, around 33% below Tuesday’s closing price, where the shares find a confluence of support from the 200-week moving average and a horizontal line stretching back to August 2021.
Longer-Term Bullish Price Target
If AMD shares resume their longer-term uptrend, we can forecast a bullish price target using a bars pattern, a technique that uses historical trends on the chart to predict future price moves.
In this case, we take the stock’s trend higher from October 2023 to March this year and reposition it from the early August low, which projects a price target of around $275.
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