AMD
AMD (AMD)’s earnings report can best be described as “within the lines.”
The company hit their earnings target on the nose. Revenue was in line with analysts’ expectations as well, which only represented a 2.2% year-over-year growth. The company’s guidance also came in right at Wall Street’s expectations.
So, what was the problem?
AMD is an AI operator, that’s the problem.
Moreover, it shows the market’s real expectations for all AI stocks.
In any other industry, the results would have allowed AMD to move higher today, but the fact that investor’s expectations for AI stocks like AMD are head-and-shoulders above other industries can act as a pitfall when they perform as expected.
AMD shares fell 8% today as the stock fell back below $150… a level that has been trying to support the stock for the last ten days.
Shares are already in an intermediate-term bear market trend. That suggests that AMD is likely to continue moving lower for the next four to six weeks.
Making matters worse is the fact that the stock is preparing to break through its 200-day moving average. That trendline is one of the more widely watched among Wall Street, meaning that the stock will bear even more selling pressure as it moves below $135.
From here, there’s another 13% downside risk for the stock as the next level of support rests at $125.
CVS Health
Wow, CVS (CVS) shares are trading almost 20% lower today after the company reported their quarterly earnings this morning.
Earnings for the quarter shocked investors as earnings per share (EPS) fell short of expectations by $0.38 and top line revenue, which only grew by 3.7% over the last year. That drop in revenue is part of a longer-term trend that has been forming for more than a year.
Last month, shares of CVS slipped below their 20-month moving average, marking the stock’s drop into an official bear market trend.
Pressures from changes in the retail space and prescription providers are responsible for the company’s long-term slump as larger competition from Amazon (AMZN) and other online providers are cutting into the company’s business.
There’s more selling to come as Wall Street analysts are still overwhelmingly bullish on the stock. As of this morning, 19 of the 28 analysts covering the stock had it ranked a “strong buy.” That will change over the next few weeks, adding more pressure to the stock.
The current chart shows the next level of likely support to land shares at $45, another 20% lower than today’s closing price.
Starbucks
Starbucks (SBUX) shares dropped from $89 to $74 during today’s trading as investors are flooding out of the stock after its earnings report.
This quarter’s report showed the first year-over-year revenue decline since the beginning of the pandemic in 2020, as the company showed EPS that missed the market’s expectations by $0.12.
Comparable sales were down in both the domestic and international markets as the company points out that their customers have been pulling in their spending.
Starbucks stock moved into a long-term bear market trend in January as the stock moved back below its 20-month moving average. That long-term trend set the course for a possible move to $70, which is now just $4 below current prices.
The chart suggests that $70 should try to provide some short-term support for Starbuck stock, however, the large drop in fundamental strength lowers the long-term target price another 20% lower to $60.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.