Having cooled significantly after a robust first half of the yr, shares of Superior Micro Dynamics Inc NASDAQ: AMD are as soon as once more doing what they love finest: rallying. The inventory is up about 40% because the final week of October and has all however undone the latest slide that had taken the shine off what was in any other case shaping as much as be a stellar yr. 

Like many of the different names within the trade, AMD has been on the receiving finish of each hype and considerations across the broader semiconductor trade and the now intertwined AI aspect of it. This may be each good and unhealthy for traders, relying in your funding time horizon. For instance, the long-term believers within the AI trade and the bullish publicity AMD has to it will likely be glad to snap up shares throughout any dip. However the extra short-term centered traders are on the mercy of any blip within the firm’s, or the trade’s, progress potential.

Nevertheless, with shares after popping 10% throughout Thursday’s session, they’re on observe to shut out their finest week shortly, and issues are trying good. Listed here are three causes to think about getting concerned earlier than the tip of the yr. 

AI tailwinds

The primary of those is AI and AMD’s favorable publicity to the seemingly never-ending hype round its potential. Yesterday noticed the corporate host its long-awaited Advancing AI occasion, which centered on AI and the launch of its new MI300 information middle GPU. Contemplating the shopping for momentum in shares within the weeks main as much as the occasion, it did not disappoint. 

The preliminary response was all very optimistic, with the brand new information middle GPU seen as a pivotal step in AMD’s means to extra carefully compete towards the likes of NVIDIA Company NASDAQ: NVDA, who has been by far the strongest performer of all AI-related shares this yr. 

However yesterday’s occasion confirmed that AMD is now simply as nicely positioned to capitalize on the trade’s ongoing progress. Past highlighting AMD’s strengthening place, different key takeaways have been the strategic buyer partnerships it is making and the depth of its roadmap. Regardless of the challenges of competing with an organization of NVIDIA’s dimension, AMD’s open-source method is anticipated to be a key differentiator. Working example, already there are experiences that each Meta Platforms Inc NASDAQ: META and Microsoft Company NASDAQ: MSFT have mentioned they’re going to be open to purchasing AMD’s new AI chips as a substitute for NVIDIA’s. 

Bullish feedback

Within the wake of the occasion, there was a run of bullish feedback and upgrades from some heavyweight analysts. Citi, for instance took the chance to reiterate its Purchase ranking on the inventory and its $136 worth goal. Have been shares to hit this within the coming weeks, it could put them above June’s excessive and ensure that the subsequent stage of the rally had began.

Raymond James, like Citi, reiterated their ranking of a Sturdy Purchase however boosted their worth goal as much as $140. They have been impressed by the response from Meta and noticed this as a key step in AMD’s pursuit of NVIDIA’s market share.  

Remarkably, having fallen nearly 70% from their 2021 excessive, a transfer as much as $140 would put AMD shares again inside 15% of a brand new file. With the present tailwinds and bullish feedback popping out of their favor, we’re inclined to suppose that is the more than likely situation for the inventory heading into 2024. 

Technically robust 

This ties in with the ultimate purpose to be bullishly weighing up an entry, and that is the technical setup. With the inventory having bounced onerous from a double low across the $95 mark, there isn’t any doubt that we’re within the midst of a contemporary rally kicking off, with a ton of momentum doubtless taking it to contemporary highs within the coming weeks. 

In some ways, this shall be a continuation of the rally that began again in October of final yr, with the post-summer droop set to look increasingly like a brief bump. The inventory’s relative energy index is barely at 67. Contemplating it must be nicely above 70 to be thought of extraordinarily overbought, there is a ton of room left for it to run earlier than it might be referred to as frothy. 

Whereas Microsoft at the moment has a “Average Purchase” ranking amongst analysts, top-rated analysts consider these 5 shares are higher buys.

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