Analysis: NVDA INTC AMD

After you receive this Alert, we will sell ALL 1,010 shares of Advanced Micro Devices (AMD) at or near $64. Following the trade, we no longer hold shares of AMD, a position that returned -30% since being added to the portfolio in February 2021. 

As we prepare for earnings season there is a vulnerability out there, and that is earnings warning season. You never know which company is going to confess a poor quarter, but last night one of our names got hit, and that was AMD.

We were concerned about the accelerating weakness in the PC market and that led us to trim back the portfolio's position in AMD shares in late September and then downgrade them to a Three rating earlier this month. 

The competition -- Nvidia (NVDA) and Intel (INTC)  -- have been telling us the environment has been challenging, and last night AMD admitted the PC market is responsible for their unusually large miss. They stated their revenue would fall short by more than $1 billion, which puts them on a negative trajectory, and that could continue unless there is a robust rebound in the PC area. With a weakening economy, we just don't see that improving nor margins for that matter.

Further, CEO Lisa Su suggested demand had fallen off due to macroeconomic conditions weakening, something we had been cautious of for some time.

AMD reports earnings on November 1st, but Wall Street did not wait to cut price targets or take their ratings lower. The stock is now below a recent support level.

In yesterday's Action Alerts PLUS Members monthly call, we had talked about how we downgraded the name while taking some chips off the table and if the stock was not going to rise up we would end up cutting it altogether. We'll keep our eye on this name but for now we have better places to put these funds.

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)