August has been a tumultuous month for Advanced Micro Devices (NASDAQ:AMD). The roller coaster ride actually began at the end of July, when the company reported Q2 earnings that spooked investors and sent AMD stock tumbling. Since then there have been spikes and at one point Advanced Micro Devices stock hit $34.19 — nearing its 2019 high of $34.39 — before dropping again. Yesterday it closed at $31.90, up 0.63% on the day, but down nearly 6% since all of this started.
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What is going on with this AMD stock price volatility? Can investors expect to see continued growth from the company, or is AMD’s remarkable success story over the past several years coming to a close?
To put things in perspective, here are the key factors that have roiled AMD stock since the end of July.
AMD’s Q2 Earnings
Kicking off this period of volatility for Advanced Micro Devices stock, the company released Q2 earnings on July 30. AMD reported revenue of $1.53 billion, which was down 13% year-over-year. That wasn’t unexpected given the bottoming-out of demand for graphics cards from AMD and rival Nvidia (NASDAQ:NVDA) from cryptocurrency miners.
However, the company issued revised full-year guidance, warning of lower than expected revenue from its semi-custom chips (primarily used in game consoles). This news knocked 10% off the AMD stock price by the time the markets closed the following day.
Advanced Micro Devices CEO Departure Rumors
InvestorPlace contributor Josh Enomoto wrote about the rumor that began circulating in early August that Advanced Micro Devices CEO Dr. Lisa Su could be jumping ship for IBM (NYSE:IBM). Su is seen as being largely responsible for the comeback that has seen AMD stock increase in value nearly 1,400% since the start of 2016. Naturally, the thought that she might leave shook investor confidence in Advanced Micro Devices stock.
New AMD Server Chips
Over the past several years, AMD has made steady progress in winning back PC market share from Intel (NASDAQ:INTC) with its Ryzen processors. One area where Intel has continued to hold an advantage over AMD has been servers used in data centers. However, on Aug. 7 AMD launched powerful new EPYC Rome processors aimed at the data center market.
Based on an advanced 7nm process, the Rome chips are claimed to more powerful and use less energy, resulting in what AMD says is a 50% lower cost of ownership compared to Intel’s Xeon processors. The company also revealed that both Twitter (NASDAQ:TWTR) and Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google will be using the new EPYC Rome processors.
Investors went gaga over the possibility of servers with Advanced Micro Devices CPUs pushing into data centers and drove AMD stock up 16% on the news.
New Intel Chips
Continuing its battle with AMD, Intel announced a new series of 10th generation “Comet Lake” processors this week. Optimized for business productivity — Intel boasts they provide a 41% performance increase over the previous generation when running Office 365 — these new processors will take on AMD’s mobile Ryzen chips for laptops starting this fall.
The Trade War With China
Adding additional volatility to all of this has been the ongoing trade war with China. There were more developments on this front through August. President Donald Trump announced new tariffs on $300 billion worth of Chinese products at the start of the month, and that news helped push AMD stock down 1.5% the following day.
After the rough start to the month, last week’s announcement of a 90-day extension on the Huawei tech sales ban was read as a signal the trade war may be cooling – which would be good news for tech stocks.
Bottom Line for AMD Stock
There is a lot to unpack here, but the overall story is that August really was an unusually turbulent month for AMD investors. Overall, AMD stock has recovered steadily in 2019 after crashing last fall along with the collapse of demand for GPUs from cryptocurrency miners.
It’s still up nearly 70% since the start of the year. The question is whether Advanced Micro Devices still has upside after hitting five-year highs earlier this month. InvestorPlace’s James Brumley has some thoughts on that…
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
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