Is AMD Stock Leading Investors Into A Trap? What You Need To Know To Avoid Getting Caught

Advanced Micro Devices Inc AMD was featured as the call of the day Tuesday on CNBC's "Fast Money Halftime Report."

What Happened: Piper Sandler analyst Harsh Kumar upgraded AMD from a Neutral rating to an Overweight rating and raised the price target from $98 to $140.

Kumar previously downgraded AMD on slowdown concerns, but his thesis is not playing out as he expected. With the company’s core businesses benefiting from secular trends, the Piper Sandler analyst has turned bullish.

Related Link: Piper Sandler Upgrades Advanced Micro Devices On Easing Concerns

Why It Matters: Farr, Miller & Washington's Michael Farr cautioned investors planning to buy AMD stock following the upgrade.

"Too early for me. This has been the leading edge of the falling knife of this market," Farr said of the chip stocks.

AMD is stuck in a downtrend, he noted. Farr told CNBC that he is worried about double ordering coming back to haunt the stock down the road.

"You'll find good points to get in, but I sure don't think there's any rush," he said. "This strikes me as a bear market trap."

A Second Take: Ritholtz Wealth Management's Josh Brown said he isn't planning to buy AMD either, but for much different reasons.

"The only reason I don't own AMD is because I'm in NVIDIA Corp NVDA and I've been in it so long the position has gotten too big for me to own both," Brown said.

He noted that if he didn't have such high exposure to Nvidia, he would buy AMD. However, he is unwilling to trim Nvidia.

"It's not interchangeable with Nvidia, but it's the right sandbox," Brown said.

"Even if we have a cyclical bear market that lasts 12 months, so what? These are the companies that are building our future over the next five to 10 years, and I think you want to be in at least one of them."

AMD Price Action: AMD has traded between $72.72 and $164.45 over a 52-week period.

The stock was up 7.71% at $101.51 at press time, according to Benzinga Pro.