Investors are grabbing shares of Advanced Micro Devices (AMD) after the stock hit its lowest level of 2024 last week.
Beware of a “Dead Cat Bounce” before buying the stock though.
Shares of the semiconductor company are trading more than 5% higher on Monday after the stock hit $120 on Friday. That price on Friday reflected the stock’s lows for 2024 after AMD shares have dropped almost 50% from their March highs.
AMD’s weakness comes as the company has been unable to gain traction in the AI chip market.
NVIDIA's dominance in AI GPUs and custom chip solutions from companies like Marvell Technology and Broadcom have intensified market competition, impacting AMD's market share and growth prospects.
As a result, the stock has fallen out of favor with Wall Street.
Bank of America and other Wall Street analyst firms have downgraded shares of AMD, increasing selling pressure on the stock.
In November, AMD shares dropped below their 20-month moving average. The break below this long-term trendline marks the shift into a long-term bear market trend for AMD.
Investors may want to allow shares to feel their way a little before buying as the stock is bouncing from a critical price level.
The $125 price served as a top for AMD shares during their bull market ascent in 2023. In technical analysis, past resistance prices often try to support a stock on its way down.
That said, a break below $125 will target another 20% decline for AMC to its target price of $100.
