Up 10% In The Past Week, AMD Stock To Continue Its Trend?

by Trefis Team
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Advanced Micro Devices stock (NASDAQ: AMD) has seen an impressive rise of 10% over the past week and currently trades at almost $98 per share. The sharp rally was driven by AMD’s recent stellar Q2 2021 earnings. The company’s revenues saw a 2x jump, coming in at $3.85 billion, up from $1.93 billion in Q2 2020, driven by higher selling prices from a richer product mix. Gross margins rose from 46% to 48% over this period, and as operating expenses only rose marginally, operating margins jumped significantly from 9% to 22%. These factors helped drive a 3.5x jump in EPS from $0.13 to $0.58 over this period.

So, after the recent rally will AMD’s stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for AMD stock average close to 3.8% in the next one-month (21 trading days) period after experiencing a 9.5% rise over the previous one week (five trading days) period. The stock has a decent 56.8% probability of rising 3.8% over the next one month. But how would these numbers change if you are interested in holding AMD stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test Advanced Micro Devices stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF AMD stock moved by -5% over five trading days, THEN over the next 21 trading days, AMD stock moves an average of 3.6 percent, with a 57.7% probability of a positive return.

Some Fun Scenarios, FAQs & Making Sense of AMD Stock Movements:

Question 1: Is the average return for AMD stock higher after a drop?

Answer:

Consider two situations,

Case 1: AMD stock drops by -5% or more in a week

Case 2: AMD stock rises by 5% or more in a week

Is the average return for AMD stock higher over the subsequent month after Case 1 or Case 2?

AMD stock fares better after Case 2, with an average return of 3.6% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 4.1% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how AMD stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold AMD stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For AMD stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

AMD’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for AMD stock by changing the inputs in the charts above.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.

 

See all Trefis Price Estimates and Download Trefis Data here

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