This stock is nearing a big potential breakout level that could send the stock skyrocketing higher.
This week has been one for all-time highs.
First, the S&P 500 hit the 3,000 mark. Then the Nasdaq Composite finished at a record high of 8,203. Just a day later on Thursday, the Dow surged above 27,000 for the first time.
Many of the stocks that have helped propel these indices higher have come from the tech sector, and one expert says one such stock could be about to breakout to new highs.
According the TradingAnalysts.com’s Todd Gordon, chip maker Advanced Micro Devices (NASDAQ: AMD) is nearing a level it hasn’t seen in nearly two decades.
“I just love, love” AMD’s chart, Gordon said, pointing to the trading range the stock has been trapped in for the last twenty years.
Gordon says the stock looks like it’s ready to “eject” from this trading range, and says that if AMD can break through the $38 level, the stock could jump back to its old highs.
AMD has been one of the best performers so far this year and is currently up nearly 80%. The stock would need to rise another 15% to reach the $38 mark, which is still around 28% below the stock’s all-time high of $48.50 reached in January 2000.
The chip maker has been an outperformer in the high-flying semiconductor space, and Gordon notes that it is “eating Intel’s (NASDAQ: INTC) lunch” this year considering Intel’s gain of just under 4% year-to-date.
“I’m going to look to leverage up, sort of do some longer-term options [in AMD] if we can break through the $38 mark… We’re coming up on these old highs… If we can get through there, that’s a 20-plus year channel that’s just been broken and we could go a lot higher in AMD so I’m watching this one,” Gordon said.
As for what catalysts could push the stock through to new highs, a resolution to the ongoing trade war between the U.S. and China is at the top of the list. However, investors have grown optimistic about AMD’s product offerings for this year and Nomura Instinet analyst David Wong says that product lineup makes the stock a Buy.
“We think that the new CPUs… will help AMD sustain its desktop processor market share momentum, driving unit market share,” Wong wrote in a note. “AMD’s high revenue growth and rapidly improving profitability justify what we consider to be an elevated [valuation] multiple.”
The analyst boosted his price target for the stock from $33 to $37.