- AMD stock rises more than 11% on Nvidia earnings excitement.
- Nvidia raised its Q1 revenue guidance by $2 billion to $24 billion.
- Market loves AI stocks and AMD should benefit.
- NASDAQ surges 3% on Nvidia rally.
Advanced Micro Devices (AMD) stock surged 11.5% on Thursday on the heels of big brother Nvidia’s (NVDA) masterful Q4 release on Wednesday. AMD is seen as the runner-up to Nvidia’s success at becoming the go-to shop for artificial intelligence chips.
AMD stock has launched itself to trade above $183 at the time of writing. The S&P 500 and NASDAQ Composite have also seen extreme rallies on Thursday and are up 1.6% and 3%, respectively, as a consequence of Nvidia’s rally.
AMD stock news
Sometimes, it’s okay when your primary competitor wins so stridently. Nvidia’s fourth-quarter consensus beat and guidance raise on Wednesday has led to a rally among most semiconductor stocks. Super Micro Computer (SMCI) has spiked 32%, while Nvidia’s primary fab, Taiwan Semiconductor (TSM), has gained 4% on Thursday.
Nvidia itself gained 15% on Thursday after beating Wall Street consensus on Wednesday by 11% on adjusted earnings and nearly 8% on revenue. What’s more, management raised its guidance for the present first quarter of 2024 from $22 billion in sales to $24 billion in sales. Additionally, gross margins are expected to arrive between 76% and 77%.
“[W]e believe 60%-70% of enterprises will ultimately head down the AI use case path as we estimate $1 trillion of incremental AI spend over the next decade,” wrote Dan Ives of Wedbush Securities in his glowing response.
Cantor Fitzgerald raised its price target on Nvidia from $775 to $900, while Benchmark raised theirs from $625 to $1,000.
One good sign for AMD is that Cantor Fitzgerald noted that demand is so strong for Nvidia’s newest AI products that there will most likely be shortages. This could help AMD sell more MI300X AI GPUs, which the company is already using in Microsoft’s Azure data centers.
Semiconductor stocks FAQs
A semiconductor is a term for various types of computer chips. Officially called semiconductor devices, these computer chips rely on semiconductor materials like silicon and gallium arsenide to process the electrical current that produces the modern world of computing. They come in many shapes, sizes, enhancements and configurations such as diodes, transistors and integrated circuits to more complicated applications like DRAM memory, simple processors and even GPUs.
First, there are the pure chip designers, such as Nvidia, AMD, Broadcom and Qualcomm. These companies use sophisticated software to design and test chips. Second, there are the equipment manufacturers that provide the machines necessary to build computer chips. These include ASML and Lam Research. Then, there are foundries that manufacture the chips. These include Taiwan Semiconductor and GlobalFoundries. Last of all are the integrated device manufacturers who design their own chips and additionally manufacture themselves. These include Samsung and Intel.
It is the observation that the number of transistors in an integrated circuit doubles every two years. The “law” is named after Gordon Moore, who founded Fairchild Semiconductor and later Intel. The doubling is possible due to the shrinking size of process nodes or parts in the computer chip. In 1971 the advanced commercial manufacturing had reached 10 microns in width. In 1987 semiconductor technology had advanced to 800 nanometers in width. By 1999, this process had moved to 180 nanometers. By 2007, the size had dropped to 32 nanometers, and this fell all the way to 3 nanometers in 2022, which is close to the size of human DNA.
In 2022, the global semiconductor industry had revenues just under $600 billion. In total, the industry shipped 1.15 trillion semiconductor units in 2021. The leading nations involved in the semiconductor supply chain are Taiwan, the United States, China, the Netherlands, South Korea, Japan and Israel.
AMD stock forecast
Thursday’s rally has placed AMD stock in contention with the all-time high of $184.92 from January 25 just a month ago. Nvidia’s success in the AI sector has placed a premium on all stocks related to AI, so AMD could continue to tread higher on the market’s euphoria.
Support is provide by the 20-day Simple Moving Average (SMA) at $173 and the $162.50 level that has worked as support since January 18. That latter level helped AMD hold up just on Wednesday this week.
Importantly for bulls, AMD stock is not overbought yet despite Thursday’s spike. The Relative Strength Index (RSI) sits at 62 and gives the stock room to continue running until traders take profits off the table.
AMD stock forecast
