AMD Q2 2022 results: what to expect?

When are AMD results expected?

AMD, the world’s leading chip maker is scheduled to report its second-quarter (Q2) earnings on 2 August after market close.

How to trade AMD shares into the results

Refinitiv data shows a consensus analyst rating of ‘buy’ for AMD – 9 strong buy, 19 buy, 13 hold and 1 sell - with the median of estimates suggesting a long-term price target of $120.00 for the share, roughly 36% higher than the current price (as of 25 July 2022).

What is ‘The Street’s’ expectation for the Q2 2022 results?

‘The Street’ expectations for the upcoming results are as follows:

• Revenue of $6.53 billion : +69% year on year (YoY)
• Earnings per share (EPS): $1.03 (+64% YoY)

As short interest dropped by over 20% in the last reporting cycle, and by over 60% from its six-month high - despite lingering recessionary fears - bulls believe that the stock is undervalued. This reasoning may have helped AMD shares rise by up to 25% from their early-July low as the company continues to grow its sales and revenue as demand for chips remains high.

AMD has also been consistently nibbling away market share from its larger rivals Intel and Nvidia and is scheduled to launch its next-generation 7000-series central processing units (CPUs) and graphics processing units (GPUs) later this year. These chips house AMD’s next-generation chip architectures, which will again place the chipmaker in a strong position versus its peers.

Furthermore, the company has been posting strong revenue growth across all its reporting segments in recent quarters and is set to continue on this trajectory.

IG sentiment data shows that 94% of clients with open positions on the share (as of 25 July 2022) expect the price to rise over the near term, while 6% of these clients expect the price to fall.

AMD technical analysis outlook

The AMD share price has had a tough start to the year, having dropped by around 41% year-to-date (YTD) while evolving in a clearly defined downtrend channel and dropping to $71.6 in July, to levels last seen in July 2020. AMD’s share price has so far found support near the September 2020 to May 2021 lows which lie not far above the 200-week simple moving average (SMA) at $68.18.

As long as the last weekly reaction high at $109.57 isn’t overcome, the medium-term downtrend remains intact with the February-to-June 2020 highs around $59.00 being targeted on a slip through the 200-week SMA.

Last week’s rise and daily chart close above the mid-June high at $88.22 is encouraging for the bulls, though. If further upside were to be witnessed and last week’s high at $91.58 be overcome, the 2022 downtrend channel resistance line at $95.45 would be targeted, together with the minor psychological $100.00 mark.

Having said that, as long as no slip below the mid-July low at $74.43 ensues, a series of higher highs and higher lows – the definition of a bullish trend – is in play.

Traders who would like to buy the stock at current levels, should consider adding a stop loss below the current July low at the $71.6 level since a fall through it would probably mean the continuation of this year’s bear market.

Summary

• AMD is set to release Q2 2022 results on 2 August after market close
• Q2 2022 results are expected to show an over 60% YoY increase in both revenue and EPS
• Revenue is expected to be boosted by high chip demand and increased market share
• Long-term broker consensus suggests the share to currently be a ‘buy’, with a median price target of $120.00
• Short interest dropped by over 20% in the last reporting cycle, and by over 60% from its six-month high
• 94% of IG’s clients with open positions are long the share
• The AMD share price has been trading in a downtrend channel since the beginning of the year but last week’s daily chart close above the June high is encouraging for the bulls