AMD had a great Q1 22' however inflation and recessions fears have capped gains. Despite this, support is below.

Overview

Advanced Micro Devices (Nasdaq: "AMD") is an US based technology company located in California that predominantly produces computer processing chips and related technology for both consumer and commercial markets. AMD competes with companies such as Intel and Nividia making CPU’s (central processing unit). In November of 2020 AMD released the Zen3 which is an improvement of the Zen2 which features in both the PlayStation 5 and Xbox XS. 

Financials

AMD had a brilliant first quarter of 2022, revenue is up 5% from expectations at $5.8Bn A 70% increase from Q1 2021 of $3.4Bn, profit atter tax was down however due to rising costs. EPS also beat expectations by 22% coming in at $1.13 per share. AMD balance sheet looks healthy too with assets up to $66.9Bn up from $10Bn making a 137% rise YoY, with liabilities also rising from $3.5Bn to $11.5Bn up 106% YoY. AMDs total cash on hand was also at a record high of $6.5bn.

Technicals

AMD has been in a downtrend since 29/11/21 bottoming out at 47% below the highs and recently breaking the lower trendline that it has been respecting since mid-2020. Price seemed to reverse on earnings release, pumping 16% and testing the upper trendline. The chart looks quite bullish based on the RSI as it is diverging against the price meaning even though the price has slowly fell the RSI remains neutral, however price action is neutral as the stock has yet to break above the downtrending line (in white). Key support below sits at $80, if AMD breaks this level then the stock could fall towards $70. Towards the upside, tough resistance sits at $106 (red circle) and until this level is broken would the overall bias change to bullish. 

Summary

Overall AMD looks somewhat undervalued. The balance sheet and income statemnet looks strong with the company as a whole seem to be constantly improving. From a technical aspect AMD has support below and resitance above and a break of that resistance is going to be very bullish. The fact AMD are taking market share from intel says a lot about the company as a whole. The new chief exec has strived to create newer, better CPU’s since when she took over in 2017 and most recently overtook intel by implementing a faster, smaller CPU into production.