$AMD · Schwab Network · 2026-11-07

In this week's episode, we will discuss Advanced Micro Devices or AMD. AMD is a long-standing global semiconductor company that designs and manufactures a wide range of semiconductor products, including microprocessors, graphics processing units (GPUs), central processing units (CPUs), and AI accelerators.

The company operates under three main divisions. The first, which is currently their largest division, is their data center division. These include EPYC server CPUs, Instinct AI accelerators, networking products, and rack-scale systems like Helios.

The client gaming category includes Ryzen processors for PCs, Radeon graphics, and semi-custom chips used in gaming consoles. And finally, the Embedded segment serves various industries with field-programmable chips for automotive, industrial, factory, aerospace, and healthcare applications.

Speaking of competition, AMD competes in various semiconductor markets.

AMD's unique value proposition is its broad and integrated product portfolio, spanning CPU, GPU, and system-on-a-chip technologies. These serve as solutions for cloud computing, AI infrastructure, edge computing, and endpoint devices.

It is one of the few companies that can deliver a wide range of rack-scale performance solutions like Helios, alongside their EPYC CPUs and Instinct AI accelerators.

Now let's take a look at some recent news from AMD. Last week of November 3rd, the company released its third quarter revenue and earnings results. The company's revenue reached $13.4 billion, up 45% year-over-year and nearly 16% quarter-over-quarter.

Non-GAAP EPS came in at $2.09, up 74% from the previous year and beating Wall Street expectations of $1.95. Non-GAP operating margin also increased to 29% of sales, up from 24% the previous year.

And the main driver of the company's growth was the data center. This segment generated record revenue of $8.5 billion, up 97% year-over-year, and now accounts for about 64% of the company's total revenue.

This growth came from strong Epic server CPU demand and the expansion of AMD's Instinct MI 250 AI accelerator. The company's Helios rack-scale systems have begun operating for major AI customers such as Meta, Microsoft, Anthropic, OpenAI, and Oracle.

Essentially, the latest report reinforces the idea that AMD is becoming increasingly dependent on AI infrastructure. One of AMD's key strengths is the continued maturity of its Radeon Open Compute Software ecosystem and rack-scale AI platform strategy.

It's AMD's answer to Nvidia's CUDA software system, which gives developers the tools to run AI workloads on AMD's accelerators. AMD's Instinct GPUs have shown better performance than Nvidia's products, making AMD an option for AI companies looking to diversify their suppliers.

AMD showed a net profit margin of more than 16%, which is three times the sector average of 5.7% and almost double the company's 5-year average of 9.7%.

First, AMD's stock valuation is historically high and much higher than major competitors like Nvidia or Intel. This high valuation reflects expectations of rapid growth, which may not be sustained if AI demand declines or job risks arise.

Despite the strong revenue growth discussed earlier, AMD's free cash flow fell to $554 million in the third quarter of 2026. Rapid inventory growth and high working capital investments highlight the challenge of converting revenue into cash.

Finally, we need to consider that AMD's current growth is dependent on hyperscaler and large AI customers. If cloud providers reduce capital spending or review existing capacity, demand for AMD's technology could decline rapidly.

Now let's look at AMD's technical picture. At the outset, you can see that AMD's technical condition is deteriorating, indicating a decrease in demand for the stock. Despite a 1-year return rate of over 60%, the stock has fallen more than 35% in the past month.

If this slowdown continues, there is a possibility of further decline in share prices. Now on the daily chart, the price is well below the 10, 20, and 50-day moving averages, confirming major technical losses in the short term.

The company is now testing a very important long-term support zone around $400 to $420. This area is important because it coincides with the rising 200-day moving average, as well as the rising 50-week moving average.

Therefore, it is extremely important to hold this area to maintain long-term upside. The daily RSI has dropped to around 31, bringing the stock very close to the traditional oversold level of 30.

However, the daily MACD histogram remains at around -13, indicating bearish momentum. Now, if we look at the weekly chart, we see that the weekly RSI has dropped to around 43, which is below the neutral 50.

So, both the daily and medium-term momentum is currently in favor of sellers. The first major support level I mentioned is roughly $400 to $420. A break below this area would signal a more serious deterioration in the long-term trend.

However, on the upside, the first meaningful resistance or hurdle is now roughly $495 to $515. Above this, the next level will be the $540 to $550 area, which will act as another resistance.

So, I would describe the current technical situation as short-term oversold, but it will remain technically bearish until prices stabilize and momentum returns.

In short, AMD's big story is its transition from being primarily a CPU competitor with Intel to becoming a larger AI infrastructure company, competing directly with Nvidia in accelerators, server CPUs, and full rack-scale systems.

This not only gives AMD the opportunity for AI training, but also opens up increasingly vast opportunities for artificial intelligence inference and enterprise computing. The strategic shift towards AI inference demand is a key driver of data center revenue growth, which as I mentioned has nearly doubled and now accounts for about two-thirds of the company's total sales.

And the company is expanding from standalone CPUs and GPUs to full rack-scale AI systems with Helios. Ultimately, while Nvidia leads by a large margin in GPU revenue, AMD has solidified its position as an indispensable alternative and leader in CPU-driven AI infrastructure.