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Advanced Micro Devices, Inc. (ticker: AMD), a Silicon Valley start-up, is a well-known US multinational semiconductor company specialising in high-performance design and manufacturing of computing, graphics and related technologies.
Founded in 1969 – and becoming a publicly held company in 1972 – AMD is the 38th largest company in the world, according to market capitalisation (US$240.4 billion). As of writing, AMD’s market cap has increased by +32% in the last year, and since 1999, the company’s market cap has experienced an eye-popping increase of nearly +5,600%.
With a global workforce of nearly 30,000 employees, AMD’s Data Centre segment is the company’s core focus, which includes graphics processing units (GPUs), central processing units (CPUs), accelerated processing units (APUs), data processing units (DPUs), artificial intelligence (AI) accelerators, and an Adaptive System-on-Chip (SoC) product.
The term ‘CFD’ stands for ‘Contract for Difference’ and represents an agreement between two parties – a buyer and seller – to pay the difference between a trade's opening price and closing price. For example, if Trader A enters a buy position (long the market) in AMD and Trader B enters a sell position (short the market), and price of AMD appreciates, Trader B must pay the difference. Consequently, this places Trader A in a winning position and Trader B in a losing position. Importantly, physical delivery is not an option with CFDs; all CFDs are cash-settled. This is irrespective of whether you trade Stocks, Stock Indices, Commodities, Bonds, and Forex, among others.
All CFDs derive their price on the underlying asset’s performance. As such, entering long or short a Share CFD with FP Markets means trading the underlying asset’s price movement. Your account equity will reflect the stock's performance.
Additionally, all CFDs are leveraged derivative financial instruments, meaning investors can control a larger position with a smaller initial investment. Suppose Trader A wants to enter long AMD using CFDs at US$148.52. To purchase 100 shares (unleveraged) would set the investor back US$14,852. However, investing in AMD share CFDs with FP Markets, you would only be required to put up 10% of that value to acquire identical exposure. Thus, by putting up US$1,485.20 (14,852 * 0.10), the investor could trade an equivalent position size of US$14,852. It is important to remember that by trading AMD through CFDs, you are trading a derivative: you do not own shares of AMD (you can benefit from dividend distributions, however).
1. Open an FP Markets Forex and CFD Trading Account
Opening a Forex and CFD trading account with FP Markets can be completed in a few simple steps, usually within a few hours.
As highlighted below, click on the ‘OPEN LIVE’ tab at the upper right side of the FP Markets webpage. This will subsequently open the Account Application. Complete the five steps and submit your application.
2. Download your Trading Platform
Once your FP Markets trading account is approved, the Team will send you the login details to your registered address. You can log in to the FP Markets Client Portal using this information. Here, you can perform several tasks, including altering and updating personal details, discovering the FP Markets social trading platform, and exploring the wide selection of trading tools traders and investors can use, as well as selecting and downloading your preferred trading platform.
You can also trade AMD through CFDs on MetaTrader 5 (MT5) and cTrader. For the purpose of this article, it assumes you trade with MT5.
3. Find the AMD Ticker
Locating the AMD ticker in your MT5 platform involves opening the Market Watch tab (Ctrl+M). As exhibited below, at the bottom of the list in your Market Watch, type ‘AMD’ in the ‘click to add’ row and click on the AMD stock.
This will generate a new row in Market Watch. You can drag and drop the AMD stock to the chart’s interface on the right side of the MT5 platform. This will subsequently open a default chart of AMD, offering real-time stock prices. Now, traders can alter their chart preferences, from background colours to chart types, timeframes, technical indicators, and drawing tools.
4. Place the Buy or Sell Order
If you have the AMD stock chart open, the most straightforward way to open the MT5 order window and place a buy or sell order is to press F9. The symbol will automatically be set to AMD. If not, you must find the AMD stock to proceed using the drop-down tab. Following this, the trader can enter order type preference and select the Protective Stop-Loss order and Take-Profit order.
An alternative method of entering buy or sell orders can be performed through the One-Click Trading application, which enables traders and investors to enter a market with one click. Important to note, however, is that One-Click Trading allows only the input of trading volume before executing your order. To set Protective Stop-Loss orders and Take-Profit orders, you must do so through the trading terminal, which can be accessed using Ctrl+T.
For those new to Share CFDs, below you will find two examples of long and short positions:
AMD's second-quarter earnings (2024) were released on 30 July, and it reported that its AI business expanded. This is good news for investors. AMD’s management team highlights that the AI business will continue to accelerate this year, and their new AI products are taking some of the market share, which Nvidia (ticker: NVDA) largely dominates with more than 80%.
AMD Chair and CEO Dr Lisa Su, commented: ‘Our AI business continued accelerating and we are well positioned to deliver strong revenue growth in the second half of the year led by demand for Instinct, EPYC and Ryzen processors. The rapid advances in generative AI are driving demand for more compute in every market, creating significant growth opportunities as we deliver leadership AI solutions across our business’.
In terms of revenue and growth, revenue increased by +9% in Q2 24 to US$5.835 billion from US$5.359 billion in Q2 23. The company increased its Gross Margin by 3 percentage points to 49% in Q2 24 from Q2 23. Net income also surged +881% from US$27 million in Q2 23 to US$265 million in Q2 24.
AMD EVP, CFO and Treasurer Jean Hu, noted: ‘AMD executed well in the second quarter, with revenue above the midpoint of our guidance driven by strong growth in the Data Centre and Client segments. In addition, we expanded gross margin and delivered solid earnings growth, while increasing our strategic AI investments to build the foundation for future growth’.
Regarding forecasts, AMD’s recent forecasts noted the following:
‘AMD expects revenue to be approximately $6.7 billion, plus or minus $300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 16% and sequential growth of approximately 15%. Non-GAAP gross margin is expected to be approximately 53.5%’.
Given the company’s performance and forecasts, this may be a stock worth adding to your watchlist. On the charts, the stock recently rallied to within striking distance of the 200-day simple moving average (SMA), and clearing this dynamic hurdle would be considered a bullish trend reversal signal for many technical analysts.
As seen from the monthly timeframe, AMD's price action is in a clean and unquestionable uptrend. The stock is also testing trendline support, extended from the low of US$1.75. This places a bold question mark on resistances at US$161.28 and US$156.17 on the daily timeframe, as well as dynamic resistance from the 200-day SMA at US$156.54.
Given where price is on the monthly chart, any selling derived from the noted daily resistances could be short-lived, and breakouts above the levels may be viewed as bullish scenarios.
Some investors prefer to deal in physical shares. Unlike CFDs, physical shares involve buying shares of AMD in exchange for partial ownership of a company in proportion to the number of shares purchased.
When one purchases physical shares through an investment broker (the ‘nominee shareholder’), the investor is referred to as the ‘beneficiary holder’ and will receive dividend payments, voting rights, and capital appreciation depending on the company’s performance.
In addition to CFDs, futures and option contracts are another way an investor can trade AMD's underlying price movement without owning the stock physically.
Futures and options contracts are generally exchange-traded financial derivatives that are standardised and provide leverage. An important observation worth noting, nevertheless, is that with futures and options contracts, physical delivery of the underlying asset is possible (although the vast majority of trades are liquidated before the contract’s expiration date [each futures and options contract has an expiration date]).
Purchasing a futures contract for AMD obligates the buyer and seller to buy and sell at a specified price on a specified future date. An options contract, however, provides the contract holder the right but not the obligation to commit at (or before) the expiration date.
ETFs pool money from investors to purchase various assets. They also trade like a publicly listed company on a stock exchange.
Most ETFs are ‘passively managed’, which means they are designed to track the performance of an underlying index, such as the S&P 500 in the US. This approach gives investors broad market exposure and helps them diversify risk by investing in multiple companies.
ETFs typically hold various assets. Their performance is unlikely to mimic that of a single stock, such as AMD; an ETF's value is determined by the overall performance of its underlying assets.
1. Does AMD pay a dividend?
Yes, AMD pays dividends; at the time of writing, the company offers a dividend yield of 5.4%.
2. What are the major differences between CFDs and physical shares?
CFDs and physical shares differ in two main ways: ownership and leverage.
As this article underlines, ownership rights are bestowed upon the investor in proportion to the number of shares purchased. This grants voting rights, dividends, and capital appreciation. However, with CFDs, investors can also receive dividend payments into their trading accounts and capital appreciation, though CFDs do not grant any ownership rights as they are derivatives.
With CFDs, leverage is widely used among stock investors, whereas investors who deal in physical shares generally invest without leverage.
Can I trade AMD on MT4 or MT5?
With FP Markets, you can trade AMD via CFD pricing on MT5 and cTrader. Most traders opt for MT5.
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