Shares of Advanced Micro Devices Inc. (AMD) have experienced a mixed performance in recent months. While the stock has gained 21.54% over the past year, it has fallen 8.91% year-to-date. The stock enjoyed a brief surge in late July after the semiconductor giant exceeded second-quarter earnings expectations, reporting 69 cents per share against a forecasted 68 cents and $5.835 billion in revenue, surpassing the estimated $5.724 billion. This positive performance attracted investors like Cathie Wood’s Ark Invest, which acquired 328,527 shares across two of its ETFs.
Ark Invest’s $47.46-million investment in AMD appeared promising initially, as the stock climbed 4.4% following the earnings release. The positive momentum was further boosted by the company’s robust data center performance and the unveiling of its new AI chip, the MI300X.
However, despite the recent upswing, AMD’s stock is exhibiting signs of a potential ‘Death Cross’, a bearish technical pattern that emerges when the short-term moving average falls below the long-term moving average. Currently, AMD’s share price of $134.27 is below its 5, 20, and 50-day exponential moving averages, indicating ongoing downward pressure.
Further supporting the bearish outlook is the MACD reading of negative 8.36, while the RSI at 38.06 suggests that the stock is approaching oversold territory. The stock’s price is also hovering near the lower Bollinger Band, which could imply further downside if the bearish trend persists.
Although Ark Invest’s purchase and AMD’s advancements in AI provided a temporary boost, the potential for a Death Cross poses significant challenges for the company going forward. AMD finds itself at a critical juncture, with a potential Death Cross indicating turbulent times ahead. While Cathie Wood’s Ark Invest remains optimistic about AMD’s future, the technical indicators suggest a cautious approach for investors.
