AMD Stock Drops After Earnings Report. Is It a Buying Opportunity?

Advanced Micro Devices beat analysts' expectations, but investors chipped the stock. Let's look at the technicals.

Semiconductor bulls were looking for Advanced Micro Devices  (AMD) - Get Free Report to rally when it reported earnings on Tuesday after the close. 

They got the opposite: At last check the shares were off 8.7%. At Wednesday’s low, AMD stock was down about 9%.

That’s on a day when the market indexes are about flat and even as AMD reported a top- and bottom-line beat.

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The problem? Guidance was a bit short of investors’ expectations.

The reaction is weighing on Nvidia  (NVDA) - Get Free Report, which is down about 1% so far on the day, while the VanEck Semiconductor ETF  (SMH) - Get Free Report is holding up a bit better, down 0.75%.

And investors are wondering whether they should buy the dip in AMD.

Trading AMD Stock

AMD stock rode a five-day win streak into its earnings report and then hit a wall.

On the plus side, the shares are holding a key area on the chart, between $80 and $82. In that zone, the stock finds its 78.6% retracement of the current rally, the weekly VWAP measure, and the 50-week and 21-week moving averages.

Just below this zone is the 200-day moving average, near $79.

In other words, this is a key $3 range for AMD stock to stay above. If it fails to hold above this area, then it could trade down to the gap-fill area at $75.20.

Below that and AMD could be vulnerable down to about $70.

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Obviously, this is not the reaction that AMD bulls were looking for. That said, as long as the stock can hold the $80 area, investors waiting for a dip — and AMD is now down about 20% from its recent high — can justify a long position.

If it does hold, let’s see whether AMD stock can fill the earnings gap back up toward $88. Above that and the $92 to $95 area is a potential upside target for longs. 

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