Advanced Micro Devices, Inc (NYSE: AMD) appears to have bottomed out last Friday after its latest earnings report as the stock has gained some 7.9% since then – perhaps due in part to the NVIDIA Corporation (NASDAQ: NVDA) earnings report that came out around that time or maybe even due to Jim Cramer now getting off the AMD bullish bandwagon. As a reminder, the last AMD earnings report (see: Time to be Bullish, Bearish or Just Realistic? Advanced Micro Devices' (AMD) Third Quarter Earnings Report) seems to have tapered the expectations of both the bulls and the bears who have become more realistic about the stock's potential and performance. I should also mention that we have had Advanced Micro Devices in our SmallCap Network Elite Opportunity (SCN EO) portfolio since last July and we have had an up and down ride – usually because of earnings reports (we are down 8.5% or so as of today).
With that said, the stock has become more bullish over the past few trading days in part because of the following news:
NVIDIA Corporation Rises After Earnings. Chip competitor NVIDIA Corporation rose around 7% last Friday after reporting earnings and shares have been rising ever since. While revenue fell 12% to $1.05 billion and roughly in-line with Wall Street's expectations (depending upon who you ask), sales of Tegra (a chip for mobile phones and the basis of Shield, a portable gaming machine the company is building and selling itself) helped to offset weaker sales of chips for laptops. In other words and just like AMD, NVIDIA Corporation is also trying to diversify itself away from the PC. NVIDIA Corporation also announced a 13% increase in its quarterly dividend and authorized an additional $1 billion for its stock repurchase program – which is also helping the stock to rise. NVIDIA Corporation and AMD Fight for "Bragging Rights." A recent article by a Forbes contributor summed up how important the fight between AMD and NVIDIA Corporation is over having the best graphics chips when the writer wrote:
"The battle at the high end of the 3D graphics stack is all about bragging rights. NVIDIA and AMD don't build warehouses full of these expensive GPUs but the halo effect of having the fastest, most feature-rich graphics architecture on the market at any given time, is an important stake in the ground for corporate flags to wave upon. That technology is also what more affordable midrange and mainstream cards are based on, so those features and performance metrics trickle down from the top as well."
So pay close attention to any reviews you see out there about AMD's or NVIDIA's chips.
New Line of Credit. On Tuesday, AMD announced it had entered into a loan and security agreement for a principal amount up to $500 million with a group of lenders and Bank of America, N.A. The company expects to end the fourth quarter with cash, cash equivalents and marketable securities worth approximately $1.2 billion and remain committed to maintaining ongoing balances of approximately $1.1 billion. The new secured revolving line of credit will provide the company with greater financial flexibility for its continued transformation. Cramer Calls AMD a "One Trick Pony." For what his opinion might be worth (and many thinks its not always worth that much or just do the opposite of what he says!), CNBC's Mad Money host Jim Cramer is off the AMD buy bandwagon, calling the stock a "one trick pony" on Monday and adding that there are better opportunities out there. Cramer's new love appears to be Apple Inc (NASDAQ: AAPL) as it sounds like he is getting back on the Apple bandwagon – maybe in the hopes of a ratings boost from all those Apple fans out there… Share Performance. Advanced Micro Devices is up 47.5% since the start of the year, up 74.4% over the past year and up 12% over the past five years:
Finally, here is the latest technical chart for AMD:
Given the trading activity over the past few days, Advanced Micro Devices might just be a pony that has learned some new and profitable tricks for investors.
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