Stock Story -
What Happened: Shares of computer processor maker AMD (NASDAQ:AMD) fell 5.1% in the morning session after the Wall Street Journal reported that Chinese officials told major telecoms companies in the country to "phase out foreign chips that are critical to their networks." This could affect chip manufacturers such as AMD, with a presence in the country. According to AMD's latest annual report, China accounted for more than 10% of the revenue generated in 2023.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy AMD? Find out by reading the original article on StockStory.
What is the market telling us: AMD's shares are very volatile and over the last year have had 24 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 24 days ago, when the company dropped 6.3% on the news that competitor Nvidia (NASDAQ:NVDA) announced a new AI chip family called Blackwell at its annual GPU Technology Conference (GTC). NVDA's event raised the bar for the industry. For instance, the company gave a specific example of a 75% reduction in power consumption for an LLM training project on Blackwell vs Hopper, an existing chip line. In addition, NVDA is also investing heavily into and making quick progress in the areas of services, omniverse, and robotics. To keep pace, competitors may need to invest more or face reduced market share.
AMD is up 17.6% since the beginning of the year, but at $162.93 per share it is still trading 22.9% below its 52-week high of $211.38 from March 2024. Investors who bought $1,000 worth of AMD's shares 5 years ago would now be looking at an investment worth $5,854.