(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Advanced Micro Devices Inc.'s (AMD) bull run may end soon. The stock has soared 27% in the last eight trading days, but technical analysis suggests that the stock may fall as much as 25% in the coming weeks. In total, that would be a more than 50% decline from its 2018 intraday high.

The negative technical forecast may stem from analysts slashing their earnings and revenue estimates for the coming quarter. Also, analysts are cutting estimates and price targets through 2020. 

AMD Chart

AMD data by YCharts

Filling The Gap

The chart shows that the stock has refilled a technical gap that was created two week ago when AMD reported weaker than expected third quarter results. Now that the technical gap has been refilled, the stock is likely to continue on its previous trend lower. It suggests the will retest their recent lows around $16 from its current price around $21.25.

Additionally, the relative strength index is now trending lower after reaching an overbought level of nearly 90, which is exceptionally high. 

Slashing Estimates

The bearish chart is a stark indicator of what is expected to be a weak fourth quarter. Analysts have lowered their earnings estimates for the company by 17% over the past month, while revenue estimates have dropped 8%. Analysts now see revenue for the quarter falling 1%.

Full-year earnings estimates are also dropping for 2018 and the next two years. 

AMD EPS Estimates for Next Fiscal Year Chart

AMD EPS Estimates for Next Fiscal Year data by YCharts

AMD already is trading at a high 2019 PE ratio of 33, well above the sector average. That rich valuation will put even more downward pressure on the stock as revenue and earnings estimates fall. At the moment, there is no indication that this negative trend will change soon.

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.