It may seem like a hyperbole, but if you want to invest in the next chipmaker set to rise to unprecedented heights like its counterpart NVIDIA (NASDAQ: NVDA) has over the past five years, look no further than Advanced Micro Devices (NASDAQ: AMD).
I can’t say enough good things about this company. Originally, I got my first followers into this company in 2018. It’s been an incredible journey since then with profits galore. And if you’ve followed along with my alerts this year, you had the chance to invest in the company back in June as well.
Hopefully you acted on my advice, because that position is up an awesome 51% as of the time of this writing, and I firmly believe we’re just getting started. The six-month chart is incredible!
My long-term, 10-year price target for AMD right now is $400.
Clearly, I’m bullish on the stock, and for good reason.
AMD Crushes Wall Street Expectations
A big reason for AMD’s recent surge is tied directly to earnings season. Generally speaking, when a big-name company like AMD is set to report and expectations for an earnings beat are high, we see a strong run-up in share value.
Not only did AMD beat Wall Street expectations but it crushed them — which says to me that this company not only has the technology people want (sales are booming) but it’s also managing the supply chain issues better than its competitors.
Highlights from the call include:
- Earnings per share (EPS) came in at $0.73, beating estimates of $0.67.
- Revenue was reported at $4.3 billion, beating the Street’s estimates of $4.12 billion.
- Revenue grew 54% year over year and 12% quarter over quarter.
- The computing and graphics segment’s revenue was up 44% year over year and 7% quarter over quarter.
- The enterprise, embedded, and semi-custom segment’s revenue was up 69% year over year and 20% quarter over quarter.
- Gross profit grew 70% year over year to $2.08 billion.
Moreover, the company raised full-year 2021 revenue guidance to growth of approximately 65%, up from 60% previously.
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With a high-priced holiday season mired with supply chain concerns, I think AMD will capitalize on the huge opportunity to steal more market share and keep the momentum in share value going. What we need is savvy dip buyers to step in after traders “sold the news” in early trading Wednesday.
Here’s the Trade
Since some of you may already have a stake in AMD, let’s turn to the options market for our next trade.
Action to Take: Initiate a “buy to open” order on one or more Advanced Micro Devices (NASDAQ: AMD) November 2021 $128 call(s) that expire on November 26, 2021.*
As I am writing, the price is $3.73 per share, or $373 total per contract.
***Keep in mind: You must be approved for options margin trading before you can initiate this trade. Call your broker; they will be happy to assist you.***
Additionally, once we’re in this trade, you’ll need to contact your broker and request to have the “expiration parameters” lifted or removed from this trade.
Our goal for this trade is to sell the contract as we near the expiration date, ideally at a price of around $6–$7 for roughly a 100% gain.
***Remember: This is an active management strategy, and you will want to check your email daily for updates and guidance or visit our website.***
Conversely, if the underlying AMD stock starts to slide away from our strike price of $128, we will actively manage this risk and sell before the option expires to minimize our losses.
To recap, here’s today’s option trade:
Initiate a “buy to open” order on one or more Advanced Micro Devices (NASDAQ: AMD) November 2021 $128 call(s) that expire on November 26, 2021:
- Strike Price = $128
- Expiration date = November 26, 2021
- Premium = $373
- Maximum Loss = $373
Since this option expires in about four weeks, be sure to check back in every day for updates and guidance. We’ll talk again soon.
To your wealth,
Sean McCloskey
Editor, Energy and Capital
@TheRL_McCloskey on TwitterAfter spending 10 years in the consumer tech reporting and educational publishing industries, Sean has since redevoted himself to one of his original passions: identifying and cashing in on the most lucrative opportunities the market has to offer. As the former managing editor of multiple investment newsletters, he's covered virtually every sector of the market, ranging from energy and tech to gold and cannabis. Over the years, Sean has offered his followers the chance to score numerous triple-digit gains, and today he continues his mission to deliver followers the best chance to score big wins on Wall Street and beyond as an editor for Energy and Capital.
