What To Do With AMD Following Massive Rally
Chris Lau, KAPITALL: Over the past month, shares of Advanced Micro Devices (AMD) are up 54.5% on convincingly above-average volume. Trading volume was approximately five-fold higher than the daily average. With no news big releases recently, investors are left speculating on why shares advanced so rapidly and so quickly. [Chris Lau called it: 2 Tech Stocks Under $3 to Watch After Markets Free Fall] ���
Reasons for Rally
Some of the possible reasons for the rally include:
1. Short-covering. Short float is around 14.3%, according to finviz.
2. Bullishness was delayed following AMD’s design win as a chip supplier for next-generation Sony (SNE) console
Analysts weighed in on the rally. Wells Fargo cited stable product pricing for AMD’s processor and the launch of two high-end processors. The bank has an outperform rating on the company.
$1,000 Video Card
In the graphics segment, AMD has a Radeon HD 7990 that costs around $1,000. A recent review on the product notes that the card, in cross fire mode, performed better than its rival’s card, the NVIDIA (NVDA) GTX 690. The good performance comes with a cost: power consumption is 100 watts higher than the GTX 690.
The card comes with popular games like Bioshock Infinite, made by Take-Two (TTWO). IT also includes games made by Electronic Arts (EA), including Crysis 3 and Battlefield 3. In the last three months, shares are up:
After considering product price against 8 games bundled with the card, reviewers could not recommend the card.
Even after the recent rally, AMD shares are underperforming its competitors. AMD is down 52% in the last year. Intel is down 14% over the one year period, too, but NVIDIA is up 6%: