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Why AMD’s stock price seems to go against the announcement of ‘The Fastest Gaming CPU’?



AMD's Stock at all time low after the release of the fastest CPU in the world

AMD saw volatility in its stock price after the announcement of their new processors. On the trading day after the news, AMD stock dropped 0.2% to 86.51. Earlier in the session, AMD stock was up as much as 2.3% to 88.72. 

AMD stock hit an all-time high of 94.28 on Sept. 2 before plummeting on a steep sell-off. They then identified the support around its 10-week moving average line before bouncing back. 

The new series is headed by the Ryzen 9 5950X, offering up to 16-cores with 32-threads and 72MB of cache. The company claims that the Ryzen 9 5950X offers the highest single-thread and multi-core performance of any desktop gaming processor, beating Intel’s Core i9-10900K in benchmarks run. 

However, short-term interest for the stock is at an all-time low, and it seems that the stock price is working against the positive news brought by the announcement of the new processors. 

The possible reasons why this is the case

First of all, the market hates uncertainty. One thing that is still uncertain is the negotiations for the provisions in the next fiscal stimulus bill.  

Another thing is that Covid-19 infections spike again, especially in Europe. While the medical field stated that they would release a vaccine in a few months, the surge in new conditions brings terrible news since it could lead to another period of lockdown restrictions and undo a lot of progress since the lifting of quarantine. 

While these factors might have pushed the stock price down, the company is still doing very well with sales. Data from the first half of September shows that Ryzen 3000-series SKUs are still selling out, despite the idea that they will soon release the next-gen CPUs. Moreover, the 3000-series SKUs will continue to ship along with the 4000-series. Work-from-home requirements are certainly one of the most significant factors for the demand. 

Aside from the new chips, AMD’s market share will increase with the recent console sales and data center growth compared to Intel (NASDAQ: INTC). 

For those long on AMD stock, it’s a wise decision to hold

AMD stock still trades at 88x times forward price-earnings ratio, an impressive valuation despite a recent pullback that made shares cheaper. 

AMD stock ranks first on the IBD 50 list of top-performing growth stocks. The IBD 50 is a screen of leading stocks showing strong relative price strength and brilliant fundamentals.

Jinel Franco is a Multi-Media Artist and a Content Marketing Strategist. For the past 3 years, she has helped several companies and individuals bring out the best of their brand with quality content and media.

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