What's Going On With AMD Stock?

Advanced Micro Devices, Inc. AMD shares are trading marginally lower by 0.55% to $170.96 during Tuesday's session and off the session low of $164.30. Shares of semiconductor stocks are trading lower following weak guidance from Lattice Semiconductor LSCC.

The overall tech sector is also lower following worse-than-expected US inflation data. Stocks across sectors are also falling after inflation for January 2024 dipped slightly but missed economists' forecasts.

In the latest report, the annual Consumer Price Index (CPI) inflation rate dropped to 3.1% from 3.4%, although it was higher than the anticipated 2.9%. Monthly CPI rose by 0.3%, exceeding the expected 0.2% increase. Core CPI, which excludes food and energy prices, remained unchanged at 3.8%, contrary to the expected decrease to 3.7%…Read More

Why This Matters

As economists were forecasting a greater decline in the inflation rate compared to what actually occurred, it suggests that the economy might not be performing as well as expected. Investors often react negatively to unexpected deviations from forecasts because it can signal uncertainty and potentially slower economic growth. This uncertainty could lead investors to sell off stocks, including AMD.

Although the inflation rate decreased, it still remained relatively high at 3.1%. High inflation can negatively impact companies like AMD because it increases their costs of production (e.g., higher input costs like materials and labor). If investors perceive inflation to remain a significant concern, they may anticipate that AMD’s profitability could be affected, prompting them to sell off the stock.

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Is AMD A Good Stock To Buy?

An investor or trader's decision to buy or sell a stock is unique to their time horizon and risk tolerance. Many typical investors evaluate earnings growth and valuation on a particular stock before making a decision.

For example, for Advanced Micro Devices, you'll notice that earnings in its last quarter grew 0.0% source. As an investor, you'll want to decide whether that's better or worse than what you'd like to see among stocks in your portfolio.

On the valuation side, Advanced Micro Devices's price to earnings ratio – a measure of how much an investor pays for the company's earnings – is grown 39.08% in the current quarter when compared with last year. That places it above similar businesses NVIDIA, Taiwan Semiconductor, Broadcom in its sector. You'll need to decide whether that makes it more or less attractive based on how you think the company will perform over time.

There are many different valuation metrics that may help you make a decision. Find more on Advanced Micro Devices's quote page, or if you'd like a deeper dive in an advanced program, try Benzinga PRO for free.

AMD has a 52-week high of $184.92 and a 52-week low of $75.92.