AMD Stock Set for Major Price Swing Following Earnings Release

TLDR

• Traders expect AMD stock to experience a significant price move of 7-8% following its earnings report.
• Analysts predict AMD will report record revenue of $9.69 billion for the fourth quarter.
• The stock has seen a slight decline of 2% ahead of the earnings release, but analysts remain confident.
• The implied volatility in options suggests a potential price swing of $17.38 after earnings.
• AMD’s data center segment is expected to drive growth, with strong demand for AI infrastructure.

Traders are anticipating a significant move in Advanced Micro Devices (AMD) stock after its earnings report. The company is scheduled to release its results after the closing bell on Tuesday, and options pricing suggests a potential swing of 7% to 8% in either direction. The implied move could bring the stock back to its October highs near $265 or push it down to around $228.

Market Expectations for AMD Stock

Ahead of the earnings report, traders are positioning themselves for a sizable price movement in AMD stock. The implied volatility in options suggests that the stock could fluctuate by $17.38, or around 7.2%, post-earnings. For comparison, the median stock movement after earnings for the last eight quarters has been about 5.3%. The heightened activity indicates that market participants are bracing for volatility as AMD reports its financial results.

Analysts are projecting AMD’s earnings for the fourth quarter to reach $1.34 per share. This marks a nearly 27% year-over-year increase in revenue, bringing the total to an estimated $9.69 billion. The growth is largely driven by strong demand for AMD’s data center products, including chips for artificial intelligence infrastructure, a segment that continues to see increased investment from tech giants.

What’s at Stake for AMD’s Earnings Report

AMD’s financial health is solid, with key metrics such as a 48.26% gross margin and a net margin of 10.32%. These figures reflect the company’s effective cost management and profitability. Despite the strong fundamentals, AMD faces sector-specific risks due to the cyclical nature of the semiconductor industry. As a result, there is some uncertainty surrounding the stock’s movement post-earnings.

In the days leading up to the earnings report, the stock has seen a slight dip of 2%. However, analysts remain bullish, with a mean price target of $276, implying roughly 12% upside from the current level. As of now, 70% of analysts have issued buy recommendations for the stock, further indicating confidence in AMD’s growth prospects.

Options trading for AMD shows a preference for calls over puts, with a ratio of 7:5. This suggests that traders are leaning towards a bullish outcome for the stock. The activity comes as AMD prepares to report what analysts expect to be a record $9.67 billion in revenue for Q4. In the same period last year, the company posted $9.25 billion in revenue, highlighting its strong growth trajectory.

The upcoming earnings report will be crucial for AMD’s future stock performance. Traders are closely monitoring the potential for a large move in either direction based on the company’s results. With $17.11 being the implied move in either direction, the coming days could prove pivotal for AMD stock.