AMD Stock Guide: How to Trade Advanced Micro Devices CFDs

Advanced Micro Devices Inc. (AMD) is a global semiconductor company that produces microprocessors, graphics processing units (GPUs), and system-on-chip solutions for various markets, including data centres, gaming, and embedded systems. AMD has heavily invested in artificial intelligence (AI) technologies, which has garnered interest from major tech companies like Microsoft (MSFT) and Meta Platforms (META).

This guide offers an overview of trading AMD stock. We'll examine AMD's market performance and highlight key factors influencing its share prices.

Additionally, we'll explore various strategies for trading AMD, with a particular focus on trading share CFDs. Whether you're a seasoned trader or just starting, this guide aims to provide valuable insights for trading Advanced Micro Devices Inc. stock effectively.

TL;DR

• AMD is a leading semiconductor company known for its innovation in microprocessors, GPUs, and system-on-chip solutions across various industries.
• AMD's growth, driven by AI advancements, has made it a popular choice among traders. Founded in 1969, AMD has experienced significant highs and lows, with notable peaks in 2021 and 2024 due to strategic advancements and market interest.
• Product launches, supply and demand dynamics, competition, and mergers/acquisitions are key influencers of AMD stock.

Why Trade AMD Stock

Advanced Micro Devices Inc. gained popularity in 2023 due to a surge in artificial intelligence (AI) developments that highlighted its business potential. The launch of OpenAI's ChatGPT in November 2022 renewed interest in AI, prompting many tech companies to focus on this growing market.

Grand View Research reported that the AI market nearly reached $200 billion in 2023. It is expected to grow at a compound annual rate of 37% through 2030. This growth and positive outlook have led to a significant increase in demand for AMD's graphics processing units (GPUs), which are crucial for training AI models.

From July 2023 to July 2024, AMD shares increased by over 30%, showing trader confidence in the company's future. These factors can potentially make AMD an appealing choice for traders looking to benefit from the expanding AI market and the company's growth.

However, past market performance does not guarantee future results.

History of AMD Stock

Advanced Micro Devices Inc. was founded as a Silicon Valley startup on May 1, 1969. Its initial public offering (IPO) occurred on September 27, 1972, with 620,000 shares issued at $15.50 each, raising $7.5 million.

From October 15, 1979, AMD was traded on the New York Stock Exchange (NYSE). On January 2, 2015, it moved to the NASDAQ stock exchange, where it is still traded as of July 2024.

Just six months after moving to NASDAQ from the NYSE, AMD's stock prices hit an all-time low of $1.69 in July 2015. Nevertheless, the company staged a remarkable turnaround later that year, driven by new products and improved profitability, and by December, its stock was trading at $2.89, a 71% increase.

From 2018 to 2021, AMD shares experienced a steady overall increase in value despite encountering some highs and lows along the way. One notable peak occurred on September 22, 2018, when AMD shares reached $31.07. This increase was possibly driven by AMD's substantial market share gains over Intel and robust sales of its Ryzen processors. For example, at Mindfactory, a prominent German online retailer specialising in computer hardware, AMD's market share surged to nearly 65%, while Intel's share dropped to around 35%.

In late 2021, AMD shares peaked at $156.93 on November 28. However, values started to decrease later that year and continued to decline until October 2022. By 2023, the company's stock rebounded as enthusiasm grew for its AI chips designed for data centres.

AMD shares reached an all-time high of $211.38 on March 7, 2024. By July 14, 2024, AMD's market capitalisation exceeded $233 billion, with its stock trading at $183.71 per share.

What Moves the Value of AMD Stock

AMD’s share prices constantly fluctuate based on their performance and profitability, as well as the general health of the market and public sentiment towards the company. Some specific influencers that may impact AMD stock prices include:

• Product Launches: New products hitting the market can impact prices in either direction, depending on their success or failure. In December 2023, AMD announced the launch of its AI GPU as a competitor to Nvidia, and the following day, prices rose by nearly 10%.
• Supply and Demand: Increased or reduced demand for a company’s product can cause share prices to rise or fall. AMD share prices fell in 2022 when general PC shipments dropped by 16% due to rising inflation and slowing PC sales.
• Strategic Partnerships: Strategic partnerships, especially with well-established companies, can significantly influence stock prices by boosting trader confidence. AMD prices rallied in May 2024 when the computing giant Microsoft announced that it would use AMD AI GPUs to optimise AI features in its Azure cloud service.
• Acquisitions and Mergers: News of companies acquiring new assets can push stock prices in either direction depending on the circumstances of the move. In February 2022, AMD prices reached a new high after they announced their acquisition of semiconductor company Xilinx in a stock deal valued at around $49 billion.

While traders analyse factors that have historically influenced price movements, it is important to remember that past performance does not always indicate future market behaviour.

How to Trade AMD Shares

There are several methods for trading AMD stocks, including but not limited to:

• Traditional Stock Market: Traders can buy, hold, or sell AMD shares on exchanges like the NYSE or NASDAQ, making trading decisions based on market conditions.
• Exchange-Traded Funds (ETFs): AMD is included in over 300 ETFs, such as the VanEck Semiconductor UCITS ETF, which has the largest weighting of AMD stock at 7.79% as of July 2024.
• Contracts for Difference (CFDs): CFDs allow traders to speculate on AMD stock price movements without owning the underlying asset.

AMD CFD Trading

CFDs are a type of financial derivative that allows you to speculate on AMD's stock price movements without needing to own the actual shares.

You may decide to initiate a Buy position or "go long," anticipating a potential rise in the stock price.

On the other hand, if market signals suggest a downturn in demand for AMD’s products or increased competition from companies like Nvidia, you might opt for a Sell position or "go short," predicting a possible drop in the stock price.

One significant feature of trading AMD CFDs is the use of leverage. Leverage lets you control a more prominent position in AMD's stock with a smaller initial capital outlay. This may magnify your potential profits but also heightens the risk of substantial losses, as both gains and losses are calculated based on the total position value, not just your initial capital.

When you decide to close your AMD CFD contract, you will either receive or pay the difference between the closing and opening prices. This allows you to potentially benefit from the fluctuations in AMD's stock price, but it also means you are exposed to the risk of significant losses if the market moves against your position.

AMD Trading Hours

AMD is traded on the NASDAQ exchange in New York, which is open Monday to Friday from 09:30 to 16:00 EST (GMT-4). NASDAQ also offers pre-market trading from 04:00 to 09:30 EST and after-hours trading from 16:00 to 20:00 EST.

Please note that trading hours for AMD on Plus500 may differ.

Risk Management Tools for AMD Trading

Effective risk management is crucial in CFD trading due to the inherent volatility and complexity of financial markets. With robust strategies, traders may be able to minimise losses from market fluctuations, regulatory changes, and unforeseen events that jeopardise their financial goals.

Plus500 provides several risk management tools to help CFD traders control their positions more effectively. For instance, using 'Close at Profit' (Stop Limit) and 'Close at Loss' (Stop Loss) orders allows traders to set a specific rate at which their positions will close, securing profits or limiting losses when opening a new position or modifying an existing one.

For example, if you believe AMD's stock will rise due to a new AI-GPU launch, you can set a Stop Loss to limit potential losses if the price unexpectedly drops.

To further manage risk, you can add a Guaranteed Stop order to your trading position, which puts an absolute cap on your potential loss. This order ensures your position automatically closes at a specified price, even if AMD's stock moves significantly against you, eliminating the risk of slippage.

However, Guaranteed Stop orders come with an additional spread charge and are only available for specific instruments. If this type of order is available for an instrument, a checkbox will be available on the platform after selecting the ‘Close at Loss’ checkbox.

AMD Stock Trading Conclusion

Advanced Micro Devices Inc. is a global semiconductor company specialising in microprocessors, GPUs, and AI technologies. It has attracted significant attention from major tech companies.

AMD's stock value is influenced by various factors such as product launches, supply and demand, and competitive positioning. Trading AMD CFDs offers a way to capitalise on these price movements, although past performance does not guarantee future results.

Traders should make informed decisions and utilise risk management tools to protect their capital and minimise potential losses.

If you’re interested in Advanced Micro Devices Inc. CFD trading, you can start trading AMD CFDs with Plus500.