AMD at $97 is trading below fair value. Should we expect gains?

Advanced Micro Devices, Inc. (NASDAQ:AMD) closed the last trading session at $97.37. The daily range was between $96 and $101. A notable concern is that the share is trading below the 50-day moving average which is at $111.13.

The lower-term 10-day moving average is at $110.05. Ordinarily, the crossover point has been a buy signal usually followed by the 20-day interaction with the 50-day. This analysis projects that the pattern will be maintained. AMD will gain from the current level to find a new high above $130.

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Declining pressure on AMD emanates from the hawkish monetary policy that has sent interest rates to two-year highs. As a growth stock, an increase in the interest rates causes downward pressure on pricing.

However, the decline in value would not be expected to last long. Therefore, the stock is expected to reverse the trend considering the high expected growth in the stock’s earnings.

In evaluating the current pricing, therefore, investors should be aware of the 29.86% expected EPS growth and the PEG ratio of 0.82. AMD is certainly undervalued, and the sharks know that.

AMD shares are significantly discounted at $97

The moving averages crossover is a signal that a bullish pattern is set to begin. AMD will eventually rally to $120, after which it will move to find $130. Though the rally may not begin immediately, and the stock may shed a bit in the next few days, it is unlikely that it will dip below $85. This analysis suggests that investors monitor price movements to see if they can catch it lower. Otherwise, the stock is a recommended buy.

Summary

AMD is significantly discounted at a price of $97. The recent decline in value is due to hawkish monetary policy. The crossover between MA-10 and MA-50 is a signal to buy at the prevailing price.

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