Can AMD Keep the Spark, or Is It About to Short-Circuit?
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It’s been a struggle over the past year for Advanced Micro Devices, Inc. (Ticker: AMD). Bulls are frustrated that the stock has been unable to capitalize on the market’s artificial intelligence hype, but could bears finally be in for a reckoning following a recent stronger-than-expected earnings report?
Chipping Away at Innovation
AMD’s business model goes far beyond just providing processors and graphics cards that are critical for artificial intelligence and more. The company has firmly established itself as a leader in the CPU and GPU markets, catering to both consumers and business. From personal computing to data centers and AI, AMD’s products are at the heart of an increasing number of industries that require high-performance computing power.
The company’s Ryzen processors and RDNA graphics cards have captured a significant market share already, while AMD’s expanding role in the data center industry, especially with its EPYC processors, positions it well for future growth. As industries like artificial intelligence and machine learning continue to ramp up, AMD’s cutting-edge technology could see increasing demand, fueling further growth.
In its most recent earnings report, AMD impressed investors with a strong performance, posting earnings-per-share (EPS)* of $1.09, easily surpassing analysts’ expectations of $0.88. The market’s response was anything but impressive, however, but could it have been a sign of capitulation to the downside? The low at $101.33 continues to hold.
Traders that think a swing opportunity is present in AMD with Direxion’s Daily AMD Bull 2X Shares (Ticker: AMUU), which seeks daily investment results, before fees and expenses, of 200% of the performance of Advanced Micro Devices, Inc. common stock (Ticker: AMD).
Below is a daily chart of AMD as of February 20, 2025.
Source: TradingView.com
Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.
The performance data quoted represents past performance. Past performance does not guarantee future results.
More Bearish Woes Before the Bottom?
Despite their strong market position, several challenges loom on the horizon that could temper its growth as a company. Intensifying competition in the semiconductor industry, with both emerging players and entrenched tech giants rolling out rival chips, could erode AMD’s market share.
Additionally, their reliance on key sectors like data centers and gaming leaves it vulnerable, particularly if budget cuts—such as those rumored from DOGE (Department of Government Efficiency)—impact contracts or enterprise spending.
Moreover, AMD’s push into new growth areas, such as AI and high-performance computing, may face headwinds. They’ve made strides in securing partnerships with cloud providers and tech leaders, but the enterprise market is fiercely competitive, and profit margins could shrink under pricing pressures or aggressive moves from competitors offering similar solutions.
If the economy continues to grow, AMD should be well-positioned to sustain its momentum. Should it show signs of slowing, it could signal potential cracks in AMD’s future prospects, raising concerns for investors.
In this situation, Direxion’s Daily AMD Bear 1X Shares (Ticker: AMDD), which seeks daily investment results, before fees and expenses, of 100% of the inverse (or opposite) of the performance of common shares of Advanced Micro Devices, Inc. (Ticker: AMD) could find a bid.
*Definitions and Index Descriptions
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
The Funds have derived all disclosures contained in this document regarding Advanced Micro Devices, Inc. from publicly available documents. In connection with the offering of each Fund’s securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding Advanced Micro Devices, Inc. is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of Advanced Micro Devices, Inc. have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning Advanced Micro Devices, Inc. could affect the value of a Fund’s investments with respect to Advanced Micro Devices, Inc. and therefore the value of the Funds.
Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.
Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with AMD and may increase the volatility of the Bull Fund.
Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with AMD and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to AMD is impacted by AMD’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to AMD at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to AMD increases on days when AMD is volatile near the close of the trading day.
Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with AMD and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to AMD is impacted by AMD’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to AMD at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to AMD increases on days when AMD is volatile near the close of the trading day.
Advanced Micro Devices, Inc. Investing Risk – AMD faces risks associated with: the highly-competitive nature of the semi-conductor industry, which includes large dominant participants; economic and market uncertainty; reductions in demand for its products; potential concentration of revenues in a few large clients; geopolitical events and pandemics; adequate protection of technology or other intellectual property; exchange rates; among other risks.
Semiconductor Industry Risk – Semiconductor companies may face intense competition, both domestically and internationally, may have limited product lines, markets, financial resources or personnel and may face risks related to the availability of materials.
Technology Sector Risk — The market prices of technology-related securities tend to exhibit a greater degree of market risk and sharp price fluctuations than other types of securities.
Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Industry Concentration Risk, Market Risk, Indirect Investment Risk, and Cash Transaction Risk. Additionally, for the Direxion Daily AMD Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.
Distributor: ALPS Distributors, Inc.