Technical analysis charts are useful rear-view mirror tools. Just after the Federal Reserve announced plans to raise rates two more times, artificial intelligence momentum weakened. The “double top” on Advanced Micro Devices (AMD) at $130 is highly bearish.
AMD stock traded at a dangerous price-to-earnings of 456 times. The forward P/E of 26.12 times might assure shareholders that the stock’s uptrend will continue. However, even Intel (INTC), a value stock, pulled back sharply by 7.87%. Fundamentals do not help Intel, whose chip manufacturing reshuffling worried investors. The billions in subsidies failed to prevent the stock’s drop last week.
AMD will not have GPU servers that compete with Nvidia’s H100 systems. Instead, the stock enjoyed a free lift when Nvidia predicted billions in GPU server sales in the current quarter. Profit-taking on NVDA stock could hurt AMD stock from here. Investors sold AMD ahead of such risks.
Value investors who bought INTC stock at $24.59 – $30 took advantage of Intel’s rally. The firm will restructure its manufacturing business. They will work like a separate unit. This will force the foundry to maximize profits. Expect Intel to separate the unit within a few years.
Your Takeaway
Be wary of INTC and AMD stock at this time. The selling that started last week could continue for weeks to come.