AMD faces rising correction risks despite AI sector optimism
AMD remains one of the biggest beneficiaries of the AI boom, but the stock's rally is increasingly facing profit-taking pressure. Investors are now focused on Micron's earnings report, which could determine the short-term direction of the entire semiconductor sector.
AMD remains closely correlated with the broader AI sector. Investors continue to show strong interest in semiconductor companies amid ongoing growth in AI infrastructure spending. Alongside Nvidia and Broadcom, AMD remains one of the primary beneficiaries of these expectations.
However, optimism is increasingly colliding with rising risks. Pressure on the Nasdaq has intensified amid concerns about elevated technology valuations and the possibility of profit-taking following the sector's extended rally.
On June 24, Micron will release its quarterly earnings report. This could be a key event for AMD, as disappointing results may trigger broader selling across the semiconductor sector.
There is also the possibility of simple profit-taking even if Micron's results exceed expectations.
Profit-taking pressure builds after ATH attempts
As mentioned in our previous analysis, AMD is finding it increasingly difficult to reach new all-time highs due to insufficient buying volume. Since the beginning of June, the stock has set a new all-time high three times, and each time the price declined the following day.
This pattern appears to be repeating, as AMD is trading more than 6% below the previous day's close in pre-market trading.
The key support level remains $500. A breakdown below this level would significantly increase the probability of a decline toward $482, followed by a potential test of the local trendline.
However, sharp pre-market declines are often partially offset by buying activity during the regular trading session. As a result, a wide trading range between $500 and $525 is expected today.
The RSI (14) continues to signal a bearish divergence, suggesting that a medium-term correction remains likely.
High expectations amplify AMD's volatility
The high concentration of capital in the semiconductor sector and elevated investor expectations have made AMD shares exceptionally volatile.
Virtually any news event has the potential to accelerate profit-taking by both short-term traders and long-term investors.
As a result, even if AMD's fundamental outlook remains strong, the stock may continue to be highly sensitive to any signs of slowing growth in the AI market or deteriorating sentiment across the semiconductor sector.
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