This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Advanced Micro Devices Selloff Is a Great Buying Opportunity

NEW YORK (TheStreet) – Shares of Advanced Micro Devices (AMD - Get Report) have taken a sharp downward turn, falling more than 18% following the release of the company's second-quarter financial results.

Prior to the announcement, Advanced Micro stock, which has soared 24% in three months, had been a relative outperformed. This compares to 4% and 5% gains for chip stocks like Nvidia (NVDA) and Texas Instruments (TXN), respectively.

From Thursday's closing price of $4.57, Advanced Micro shares are up 18% on the year to date. Those gains, however, have evaporated quickly. The stock closed Friday at $3.83, down 16%. This is nothing more than a gross overreaction to numbers that were -- in my opinion -- actually better than expected.

How Apple's Big Deal With IBM Hurts BlackBerry and Microsoft

Google Surges: What Wall Street's Saying

Taiwan Semiconductor's Ties to Apple Are a Double-Edged Sword

By ignoring the 24% year-over-year jump in revenue and that management reversed last year's nine-cent loss to a two-cent profit, investors demonstrated their lack of understanding of what the company is actually working to achieve. That the stock is now declining opens the door for new investors to capitalize on possibly the quickest 18% bounce they'll ever see.

Advanced Micro has a new direction. CEO Rory Read is working to transition the company away from being a pure-play PC shop to a strong player in video game chip technology, among other areas.

This move makes perfect sense given that processor revenue just fell 20%. But due to Advanced Micro's efficiency improvements, that segment still posted a profit. No one saw that coming, especially since the entire chip industry has struggled with low average selling price.

But with better-than-expected results just released from Intel (INTC) things are getting better. Not only does Intel project chip prices and volumes to rebound, but Intel has raised both its third-quarter and full-year margin outlook, suggesting there is still money to be made in this industry.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AMD $3.55 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs