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AMD Share Price Has Collapsed in 2022. Time to Buy the Dip?

Santa Clara, CA, USA. February 18, 2021. Editorial Use Only, 3D CGI. AMD Signage Logo on Top of Glass Building. Workplace Multinational Semiconductor Company Office Headquarter.

The AMD share price has come under intense pressure in 2022 as investors worry about the company’s demand. The stock is trading at $78.60, which is about 52% below the highest point in 2021. As a result, its total market cap has crashed to about $123 billion. Other semiconductor stocks like Nvidia, Taiwan Semiconductor, Qualcomm, and Texas Instruments have also crashed.

Is AMD a good stock to buy?

AMD is a leading semiconductor company that is succeeding in dethroning Intel as the dominant player in the industry. The firm sells its products to other large tech companies that operate data centers and other industries. It is also popular among PC users like gamers. Indeed, benchmark scores find that AMD’s chips perform better than Intel’s.

AMD stock price surged hard during the pandemic as demand for the company’s products rose. More people were buying PCs to work from home while gamers increased. The chip shortage that ensued helped push its pricing power. Investors also cheered the company’s purchase of Xilinx.

However, the AMD share price has tumbled as investors worry about slow demand since the number of people buying computers has dropped. In addition, with inflation rising, many companies are expected to slow their investments. Still, there are signs that there is still demand for chips. This week, Taiwan Semiconductor reported strong results and forward guidance. The CEO said:

“Our second quarter business was supported by HPC, IoT, and Automotive-related demand. Moving into third quarter 2022, we expect our business to be supported by continued demand for our industry-leading 5nm and 7nm technologies.”

In the long-term, AMD stock price will likely bounce back because of the company’s strong market share and its integration with Xilinx. But, most importantly, the company’s valuation has become relatively cheaper compared to where it was in 2021.

AMD share price forecast

The daily chart shows that the AMD stock price has been in a strong bearish trend in the past few months. Along the way, the stock has formed a descending channel that is shown in black. The shares have also moved below the 25-day and 50-day moving averages. It has also moved slightly below the important resistance level at $83.92.

Therefore, there is a likelihood that the AMD share price will continue rising as bulls attempt to retest the upper side of the descending channel. This view will be confirmed if the shares move above the resistance at $83.92. However, a drop below the false breakout point at $71.83 will invalidate the bullish view.

AMD share price