Wait for a pullback on Advanced Micro Devices, this portfolio manager says

Shares of Advanced Micro Devices (Advanced Micro Devices Stock Quote, Chart NASDAQ:AMD) have been a hot commodity this year as the stock has gained over 70 per cent year-to-date. But while the company has done well to take a bite out of Intel’s market share in the semiconductor business, the stock is now in overbought territory, says portfolio manager Kim Bolton, who advises investors to wait for a pullback before jumping in.

“It’s a very, very popular stock and with the institutional players out there, too. But it’s priced to perfection at this stage,” said Bolton, president of Black Swan Dexteritas, to BNN Bloomberg on Wednesday.

“It’s currently trading in the low $30s but [investors] can buy this down at around $25. You’re going to have a correction, if not many, this year and you’ll have the chance to buy it,” he says.

AMD recently unveiled its third generation Ryzen destop processors including the Ryzen 9 3900X CPU, which the company calls the highest performance 12 core desktop processor ever, while the stock also benefitted recently from Microsoft’s announcement that its next-generation Xbox console will run on an AMD chip, said to make it four times as powerful as the Xbox One X and set to launch in late 2020.

Those results are helping propel the stock to highs not seen in over a decade, with a lot of the hype stemming from AMD’s ability to punch above its weight in comparison to sector leaders Intel and Nvidia.

“AMD has really eaten Intel’s lunch, and it is very much being incorporated as the poster child when it comes to taking market share from the likes of Intel and even Nvidia,” says Bolton.

AMD last reported its financials at the end of April when its first quarter revenue of $1.27 billion and EPS of $0.06 per share were slightly better than the expected $1.26 billion and $0.05 per share. The company called for second quarter revenue of about $1.52 billion. (All figures in US dollars.)

Last week, the stock popped up above the $30 mark for the first time since early October of last year.

“I would hold off and I think you’re going to be able to buy this somewhere down in the mid $20s,” says Bolton.

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