AMD Bulls Eat For A Year, Starve In A Day

After a steady rally from late January to early March, Advanced Micro Devices, Inc. AMD has now given up all of its 30 percent gains in 2017 and is down 10 percent on the year.

When AMD failed to live up to extremely high market expectations in Q1 by reporting mostly in-line earnings results, the stock plummeted more than 24 percent in a single day, giving up more than four months of gains and putting the medium-term outlook for bulls in jeopardy.

At this point, almost all 2017 AMD buyers are in the red on their positions, a dynamic that will weigh on the stock if it attempts to retrace its steps back above $15.

Related Link: Advanced Micro Devices Plummets Following Q1 Earnings: What Are Analysts Saying?

At the same time, even after the 24 percent selloff, AMD shares remain up 343 percent in the past two years. Plenty of longer-term AMD buyers are still sitting on huge gains. If the stock starts to gain bearish momentum throughout the rest of the week, these traders could start to feel pressure to lock in those gains while they still have the chance.

In addition, AMD doesn’t have a clear catalyst ahead to cut off bearish momentum. The company’s Vega CPUs aren’t expected to drive potential upside until 2018, and the company’s next earnings report is three months away.

For AMD bulls, one key factor to watch for AMD is how analysts react to the big move. While several analysts commented on the Q1report, the big move in share price could trigger upgrades on Wall Street. After all, AMD’s earnings and revenue were mostly in-line with expectations, but the stock has given up roughly a third of its market cap since it hit its 2017 highs in early March.

Joel Elconin contributed to this report.