Shares of Advanced Micro Devices (AMD) surged more than 4% on Monday following the announcement that the chipmaker had acquired data center infrastructure provider ZT systems for $4.9 billion. This move is seen as a significant boost to AMD’s artificial intelligence (AI) portfolio, which has been a concern for investors in recent months.
Since reaching its record high in early March, AMD shares have experienced a decline of about 25%. One of the reasons for this decline is the perception that AMD was not capitalizing on the booming AI chip market, which is currently dominated by rival Nvidia (NVDA).
Analyzing AMD’s chart, it is evident that the stock has been trading within a descending channel since a bearish engulfing pattern marked its record high in March. However, there has been a recent upward trend after finding support at the lower trendline of the channel. It is worth noting that trading volumes have remained below-average during this upward move, suggesting a lack of conviction from larger market participants.
Additionally, a death cross pattern formed when the 50-day moving average crossed below the 200-day moving average last week, indicating the potential for lower prices in the future.
Investors should pay attention to key support and resistance levels on AMD’s chart. An initial support level to monitor is around $150, which is just 3% below Monday’s closing price. This level may attract buyers looking for entry points near a trendline that connects several peaks and troughs between December and July.
If the stock experiences a deeper retracement, it could fall to the $122 area, which aligns with the November high and this month’s low. This area may present buying opportunities for investors.
On the other hand, resistance levels to watch include the $184 region, just above the upper trendline of the descending channel. Here, the stock may encounter overhead resistance near a horizontal line that connects trading levels between January and April, as well as the prominent July swing high.
A more bullish move could push the stock towards the $211 mark, where sellers may look to lock in profits near a range of similar prices just below the record high.
In Monday’s trading session, AMD shares closed at $155.28, representing a 4.5% gain.
It is important to note that the information provided in this article is for informational purposes only and should not be considered as financial advice. Investors should conduct their own research and analysis before making any investment decisions.
In conclusion, AMD’s recent acquisition of ZT systems has sparked a positive reaction from investors, leading to a surge in the company’s stock price. However, it is crucial for investors to monitor key support and resistance levels on AMD’s chart to gauge the stock’s future movement.
