Quick Win by the Algorithm: Bearish Forecast in-line for AMD

Quick Win By The Algorithm

On March 24, 2017, the I Know First algorithm issued a bearish forecast for Advanced Micro Devices Inc. (NASDAQ: AMD). AMD had a signal of -7.23 and a predictability of 0.63. As a result, in accordance with the forecast, the company’s stock decreased by 25.16% within 3 months, showing a quick win by the algorithm.

Advanced Micro Devices Inc. (AMD) is an American multinational semiconductor company, that develops computer processors and related technologies. The company’s main products include microprocessors, motherboard chipsets, embedded processors and graphics processors. AMD is the only substantial competitor to Intel in for the market for x86 based microprocessors.

On Monday the 30th of April, AMD released its first quarter results. After the stock tripled over the past year, expectations remained high. The results were some-what in-line with analysts’ expectations. Concern amongst investors, stems from a lower than anticipated gross profit margin of 33%, down from 34% the previous quarter.

In addition, it is important to note that due to the recent hike in share price, the results of the quarter would have to have been near-perfect for the price of the stock to be justified.

Revenue was up $152 million to $984 million from the same period in 2016. An operating loss of $29 million, was significantly lower than that of last year. AMD posted a net loss of $73 million, $36 million less than Q1 2016.

Advanced Micro Devices has two reportable segments:

  • Computer and Graphics – (desktops, notebook processors, chipsets, graphic processors)
  • Enterprise, Embedded and Semi-Custom – (servers, engineering services, royalties)

The first segment, accounted for 60.3% of revenues and was up almost 29% year-over-year. Computer and Graphics growth was mainly derived from high desktop and graphic processor sales.

Additionally, the enterprise, embedded and semi-customer segment brought in the remainder of revenue, up 5.1% from the same time last year to $391 million.

Interesting to note is that I Know First’s very own Motek Moyen wrote an article on the 24th March, 2017. In the article, he details the various patent infringements claims AMD is in the midst of. Motek concludes with “I am not recommending a buy rating for AMD right now. The 30-day and 90-day algorithmic forecasts for AMD are negative. My thinking is to take profit now and wait for a lower re-entry point for AMD. The 30-day algorithmic forecast is that AMD is more likely to trend down than up.”

This bearish forecast on AMD was sent to the current I Know First subscribers on March 24, 2017.

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Before making any trading decisions, consult the latest forecast as the algorithm updates predictions daily. Although the algorithm can be used for intra-day trading, the predictability tends to become stronger for forecasts over longer time-horizons.