Advanced Micro Devices, Inc. (AMD) shares rose more than 15% on Wednesday morning after the company reported its fourth quarter financial results. Revenue rose 6% to $1.42 billion but missed consensus estimates by $20 million. Non-GAAP earnings were in line at eight cents per share, which was probably better than many investors were expecting, especially following weakness in NVIDIA Corporation's (NVDA) financial results earlier this week.
Like many companies in the space, AMD lowered its first quarter revenue guidance to $1.2 billion to $1.3 billion – lower than the $1.47 billion consensus estimate. The weakness was attributed to slower sales in the graphic card segment as the company works through its cryptocurrency-mining inventory after the market collapse over the past few months.
JPMorgan analysts weighed in on the results, saying that AMD is executing on its product roadmap and making progress toward its 2020 financial model. The analyst firm raised its price target to $20 per share, but the figure represents a 7% discount to Wednesday's opening price.
From a technical standpoint, the stock is nearing a breakout from a rising wedge pattern toward prior highs of around $24.00. The relative strength index (RSI) remains neutral at about 58.97, and the moving average convergence divergence (MACD) continues to slowly trend higher. These indicators suggest that the stock has more room to move on the upside.
Traders should watch for a breakout from the rising wedge pattern and R1 resistance at $22.80 toward prior highs of around $24.00. A breakout from these levels could lead to a move toward R2 resistance at $27.13. If the stock fails to break out, traders could see a move lower to retest strong trendline, 50-day moving average and 200-day moving average support levels near $19.50.
The author holds no position in the stock(s) mentioned except through passively managed index funds.