Is Most-Watched Stock Advanced Micro Devices, Inc. (AMD) Worth Betting on Now?

Advanced Micro Devices (AMD) is one of the companies that Zacks.com users have been keeping an eye on lately. As a result, it could be a good idea to look through some of the variables that could have an impact on the stock’s performance in the near future.

Over the last month, shares of this chipmaker have gained +3.8 percent, outperforming the Zacks S&P 500 composite’s gain of +5.7 percent. The Zacks Electronics – Semiconductors industry, which Advanced Micro is a part of, has gained 6.8 percent in the same time period as Advanced Micro. With that in mind, the crucial issue is: where may the stock be heading in the near future?

While media reports or speculations of a significant shift in a company’s business prospects normally cause its stock to ‘trend’ and cause a price change to occur immediately, there are always certain underlying realities that finally dominate the buy-and-hold decision-making process.

Earnings Estimate Revisions

Among all other considerations, we at Zacks emphasize evaluating the change in a company’s projected future earnings over anything else. This is because we believe the fair value of its shares is determined by the present value of its future stream of profits, rather than the past worth of its earnings.

We are primarily interested in how sell-side analysts that cover the stock are changing their earnings projections in order to account for the effect of the most recent business developments. Furthermore, if profits expectations for a firm improve, the fair value of the company’s shares increases. Investors’ interest in purchasing the stock is piqued when the fair value of the stock is higher than the current market price, resulting in the stock’s price rising. In order to account for this, empirical research has found a high association between changes in earnings estimate revisions and movements in short-term stock prices.

Advanced Micro is predicted to report earnings of $0.91 per share for the current quarter, representing a change of +75 percent from the year-ago quarter, according to analysts. The Zacks Consensus Estimate for the stock has decreased by -0.2 percent in the last 30 days.

The consensus earnings projection of $3.99 for the current fiscal year is an increase of +43 percent over the preceding year. The value of this estimate has changed by -0.2 percent over the previous 30 days.