![]() To some, a 9% daily drop could even sound as if the market has lost its mind on this AI-powerhouse. With so much optimism being baked into the share price, a lot of market participants might be wondering why AMD's share price reacted so violently on the recent results. To top all that, Wall Street Analysts have also turned extremely bullish on the company in recent months, thus prompting a sharp recovery since the second half of 2022. And as we are now facing the reality of a pending recession, things could get ugly. The nearly 50% return is still above that of the S&P 500 for the period, however, once we take into account AMD's beta of almost 2.0 then it still underperformed the market on a risk-adjusted basis.Īs a high beta company, AMD also benefited massively from the bear market rally in the equity market over the past few months. Secondly, during the past few years, AMD saw an unprecedented demand for its products across its entire portfolio.Īfter considering these two points, AMD has been a very poor investment even though it delivered a total return of nearly 50% since July of 2020 (the date I first covered the company).Firstly, AMD's share price is far more risky than the broader sector ETF as one could easily observe by the extreme volatility of the former in the graph below. ![]() The reason why this is so important is twofold: While everyone was cheering the new wave of AI-driven demand, the quarterly report from earlier this week is a warning that should not be ignored.Īs a result, the company is now underperforming the broader semiconductor sector as measured by the iShares Semiconductor ETF ( SOXX). Prompted by the bear market rally in equities, AMD's stock has almost doubled in a matter of just a couple of months from October of last year to March 2023. ( NASDAQ: AMD) over the recent months came to a sudden halt after market participants were once again surprised by the deteriorating outlook for the company. The sharp rebound of Advanced Micro Devices, Inc.
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