Advanced Micro Devices’ (AMD) Earnings Come Out after market close today, July 25. Here’s a look at what might be expected from the semiconductor stock.
Chipmaker Advanced Micro Devices (AMD) reports second-quarter earnings today after market close. For the most part, shares have recovered from their significant drop after last quarter’s earnings and the stock is about 10% below its 52-week high of $15.55.
In recent quarters, AMD has benefited from trends that include augmented reality and virtual reality, cryptocurrency mining, and growing demand for high-powered CPUs and GPUs for other applications. The company has launched several products in recent months, and has announced plans to continue rolling out new products throughout the rest of the year.
The company continues to expand its Ryzen chips to target multiple markets, including the recently launched Ryzen Pro CPUs, and plans to launch mobile Ryzen chips later in the year, according to a company press release. The company started to release its Vega graphics cards, and. on top of those products, AMD just launched its line of EPYC server chips for data centers, with the first EPYC-based servers shipping in June according to the company.
While competition is fierce in the CPU market with major players such as Intel (INTC), it looks like some of AMD’s new products have been well received based on recent market share reports from PassMark, which charts market share by looking at the number of performance tests conducted with chips. According to PassMark’s recent estimates, AMD’s CPU market share at the start of the third quarter this year increased to 23.10% from 17.50% in the year-ago period.
It remains to be seen how a lot of the new offerings will stack up against other products in the long run. AMD faces significant competition from Nvidia (NVDA), Intel (INTC), among others as it continues to expand the products it sells. On top of the many competitors, the semiconductor industry can be very volatile and demand for different semiconductor based components can shift quickly as technology continues to develop at a rapid pace.
FIGURE 1: A VOLATILE STOCK.
Advanced Micro Devices (AMD) can be very volatile in trading, gapping up and down on a somewhat regular basis. The stock started the year dropping to a low of $9.42 before spiking to a high of $15.55. The stock gave up most of those gains in the first part of the second quarter, but it has rebounded over the past few months and is up 23.88% year-to-date. Chart source: thinkorswim® by TD Ameritrade. Data source: Standard & Poor’s. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.
For AMD’s second-quarter earnings, the company is expected to breakeven on revenue of $1.16 billion, according to third-party consensus analyst estimates. Revenue is expected to grow 12.9% year-over-year and earnings coming in at breakeven is an increase from the $0.05 loss per share reported in Q2 2016.
Historically, AMD has been a volatile stock in post-earnings trading. In the past eight quarters, the stock has averaged a one-day move of 15.6% in either direction the day after its earnings release, according to Schaeffer’s Investment Research. After last quarter’s report, the stock dropped 24.2% in trading the next day.
Looking at options activity, traders have priced in about a 10.8% potential share price move in either direction around the earnings release, according to the Market Maker Move indicator on the thinkorswim® platform. In short-term options trading at the July 28 expiration, calls have been active at the 14.5 and 15 strike prices and puts have been active at the 13.5 and 14 strikes. As of this morning, the implied volatility sits at the 60th percentile.
Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation to sell the underlying security at a predetermined price over a set period of time.
In addition to all the earnings reports this week, we’ve also got the Fed’s July meeting and the first estimate for Q2 GDP coming out on Friday. There likely won’t be much new information from the July meeting since Fed Chair Janet Yellen just delivered her semiannual Congressional testimony, but the GDP figure could lead to heightened volatility in markets depending on the results. If you have time, make sure to check out today’s market update to see what else is happening.
Good Trading, JJ @TDAJJKinahan
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
Probability analysis results from the Market Maker
Move indicator are theoretical in nature, not guaranteed, and do not
reflect any degree of certainty of an event occurring.
TD Ameritrade and all third parties mentioned are
separate and unaffiliated companies, and are not responsible for each other's
policies or services.
Inclusion of specific security names in this commentary
does not constitute a recommendation from TD Ameritrade to buy, sell, or
Market volatility, volume, and system availability may
delay account access and trade executions.
Past performance of a security or strategy does not
guarantee future results or success.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2018 TD Ameritrade.