AMD Options Price A 9% Swing On Earnings: What Does History Say?

Advanced Micro Devices Inc. (NASDAQ: AMD ) has beaten Wall Street’s earnings estimate in 10 of its last 12 quarters. That sounds like the recipe for a stock that consistently rallies after earnings. History says otherwise.

Since August 2023, AMD has finished the day after earnings lower in seven of its 12 reports, despite missing consensus only twice, and those misses amounted to fractions of a cent. The chipmaker reports fiscal second-quarter results on Aug. 4 after the close. For investors heading into Tuesday’s earnings, the real question isn’t whether AMD beats estimates.

It’s whether management convinces Wall Street that the AI growth story is still accelerating. 7%. Options are pricing a move slightly above both historical averages. 7%.

The trap for investors is assuming an earnings beat automatically translates into a higher stock price. It hasn’t. Santa Clara, California-based AMD has missed consensus only twice during the past three years, and both misses amounted to fractions of a cent. Yet among the ten quarters where earnings exceeded expectations, the stock finished higher the following day only five times.

5% This Week The explanation is simple: investors buy AMD for where AI revenue is headed, not where it has been. The reason is guidance. Increasingly, investors care far more about the management’s outlook for the quarters ahead.. Nothing illustrates that shift better than February.

AMD delivered its largest earnings surprise of the past three years, beating consensus by more than 16%. 3%. Three months later, the opposite happened. 6%, their strongest post-earnings gain in the sample.

In both cases, guidance, not earnings, determined the market reaction. Report Date EPS Act. EPS Est. 61% Feb.

31% Nov. 51% Aug. 76% Feb. 27% Oct.

62% Jul. 91% Jan. 54% Nov. 69% Aug.

00% Source: TradingView How Is The Street Positioned On AMD Stock? Wall Street consensus is bullish on AMD, with 27 Buy ratings and five Hold ratings across 32 analysts tracked Analyst Ratings. The average price target of $533 sits about 12% above Friday’s close. Between July 14 and July 30 alone, tracked 11 analyst updates.

Eight included higher price targets. None lowered expectations. The average price target of $533 implies roughly 12% upside from Friday’s close. Date Firm Analyst Action Price target Jul.

30 Susquehanna Christopher Rolland Raise, Positive $450 → $500 Jul. 27 Mizuho Vijay Rakesh Raise, Outperform $615 → $625 Jul. 27 Wedbush Matt Bryson Raise, Outperform $450 → $600 Jul. 24 UBS Timothy Arcuri Raise, Buy $700 → $730 Jul.

24 Jefferies Blayne Curtis Raise, Buy $515 → $640 Jul. 24 Roth Capital Suji Desilva Raise, Buy $500 → $650 Jul. 24 RBC Capital Srini Pajjuri Maintain, Sector Perform $540 Jul. J.

Muse Maintain, Overweight $700 Jul. 24 Rosenblatt Kevin Cassidy Maintain, Buy $665 Jul. 23 Benchmark Cody Acree Raise, Buy $485 → $685 Jul. 14 BofA Securities Vivek Arya Raise, Buy $550 → $620 Analyst Ratings Susquehanna analyst Christopher Rolland, who raised his target to $500 last week, said, “we expect better results/guidance, driven primarily by [data center],” pointing to continued strength in EPYC processors and Instinct accelerators.

” Bryson highlighted AMD’s expanding collaborations with Microsoft Corp. 22 in earnings per share. The Street is underwriting a much larger AI infrastructure cycle built around recently announced multi-gigawatt deployments with customers including OpenAI, Meta Platforms Inc. (NASDAQ: META ) and Anthropic.

91, while still up approximately 120% year to date, giving the company a market capitalization near $776 billion. Read Also: Apple’s Worst Day Since March 2020: A ‘100-Year Flood’ Triggered It Image: Shutterstock