AI Hype Hangover? AMD Faces Pullback Test?

Advanced Micro Devices (AMD) delivered a mixed bag in its Q4 earnings report. It delivered in-line fourth-quarter earnings fuelled by surging data center revenue, beating on the bottom line but missing on revenue estimates, triggering a 9% after-the-bell plunge. 

The data center segment, AMD’s growth engine, continued its impressive run with a 38% year-over-year surge in revenue, exceeding expectations. This affirms the company’s strong position in the cloud computing space, fuelled by AI adoption and high-performance computing demand. Client revenue surged 62%, driven by robust sales of AMD Ryzen processors. This segment, a key beneficiary of the work-from-home trend, shows continued resilience despite broader market concerns. 

However, the gaming segment faltered, with revenue declining 17%. This weakness reflects a normalization of demand after a pandemic-driven surge and could raise concerns about future performance in a potentially saturated market. 


The daily chart shows that despite the post-earnings dip, AMD’s price action remains above its key 50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line), indicating long-term bullish sentiment. However, the Relative Strength Index (RSI) stands at 65.21, flirting with overbought levels. This suggests the recent sell-off might be a technical correction rather than a fundamental shift. 

With the price action ($160.20) looking to open below the 23.60% Fibonacci retracement level ($163.26) following an over 9% gap down, the 23.60% Fibonacci retracement level could play a key part in determining the share’s direction in the upcoming sessions. A push back above the 23.60% Fibonacci retracement level would leave the all-time high of $184.92 firmly in play. A break above the all-time high on significant volume could confirm the bullish momentum, leaving the $195.00 price level as the next likely level of significance in the short term. 

However, a sustained push below the 23.60% Fibonacci retracement level would leave the 38.20% Fibonacci retracement level ($149.85) as the next significant support lower. A successful bridge of the 38.20% Fibonacci retracement level could trigger a sell-off, with the 50.00% Fibonacci retracement level ($139.02) and 61.80% Fibonacci retracement level ($128.19) acting as the next significant levels lower.  


AMD’s post-earnings dip raises concerns about the company’s near-term prospects, but the long-term bull story remains intact. The technical picture suggests a potential tug-of-war between bulls and bears, with the 23.60% Fibonacci level acting as a critical pivot point. A sustained bounce above this level could see AMD resume its upward climb towards the all-time high, while a break below could trigger a deeper correction, with the 38.20% and 50.00% Fibonacci retracement acting as significant levels of interest.  

Sources: TradingView, Trading Economics, AMD, Dow Jones Newswire, Seeking Alpha, Zack’s. 

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

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