AMD Shares Indicate Potential Reversal Amid HSBC Downgrade

Shares of Advanced Micro Devices Inc. (NASDAQ:AMD) may be on the verge of a reversal. After a double downgrade from HSBC on January 8, the stock's candlesticks reveal a rare and notable pattern.

What Happened: The recent candlestick chart displays a ‘Bullish Stick Sandwich’ pattern. This technical formation suggests a possible upward price reversal, which is important for traders to note.

This particular pattern consists of three consecutive candlesticks that visually resemble a sandwich on a price chart. In this scenario, a strong bullish candlestick is wedged between two bearish candlesticks, indicating potential buying strength despite the prevailing bearish trend.

A larger middle candle can enhance the reliability of this signal while also suggesting temporary strength from buyers. For this reversal to be confirmed, traders will look for subsequent bullish candlesticks that break above the previous bearish highs.

John, the founder of Rock Trading Group, expressed optimism in an X post, saying, “Call me nuts, I believe $AMD could outperform $NVDA this year,” drawing attention to the technical pattern in question.

However, a closer look at the technical analysis of AMD's daily moving averages presents a less favorable outlook. On Tuesday, AMD’s shares closed at $116.09, below its eight-day simple moving average of $121.77 and the 20-day average of $122.83. Furthermore, the 50-day and 200-day simple moving averages stand at $132.86 and $151.11, respectively, reinforcing a bearish sentiment.

Meanwhile, the relative strength index (RSI) shows a value of 35.51, indicating that the stock might be moderately oversold, yet still remains in a neutral position.

Why It Matters: HSBC analyst Frank Lee downgraded AMD from a “Buy” to “Reduce,” significantly slashing the price target from $200 to $110 per share. He cites anticipated reductions in demand for AMD’s MI325 GPU along with supply chain issues from Samsung impacting high-bandwidth memory as key reasons for the downgrade.

Lee also warned that AMD could experience a competitive disadvantage in AI solutions until its MI400 series is launched, projected for late 2025 or early 2026.

In contrast, Loop Capital initiated coverage of AMD with a “Buy” rating on January 14 and set a price target of $175. This firm remains confident in AMD’s growth outlook, particularly in the accelerated computing sector. Loop Capital believes AMD has a strong chance to capture substantial market share in both data center and PC segments. They perceive AMD’s current position as undervalued compared to competitors, particularly after underperforming the PHLX Semiconductor Sector index in 2024.

As per the latest consensus from around 31 analysts tracked, AMD holds a “Buy” rating with an average target price of $184.53. Recent recommendations from analysts such as Keybanc, Loop Capital, and Wells Fargo suggest a promising upside potential, with an average target price indicating a 41.01% rise.

Price Action: In pre-market trading on Wednesday, AMD shares increased by over 0.2%. However, the stock has seen a decline of 8.37% over the past month and a significant 26.87% drop over the last year.

Understanding stock movements and technical patterns will remain crucial for investors tracking AMD’s performance amidst these mixed signals.

AMD, stock, reversal