AMD Has More Gains Ahead as Paul Tudor Jones Weighs in on Market
AMD shares skyrocket on a massive deal with ChatGPT creator OpenAI.
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Shares of AI chipmaker Advanced Micro Devices (AMD) vaulted to a 23% gain on Monday, on a multi-billion dollar deal with privately held OpenAI.
How is the deal structured? The Santa Clara, California-based Advanced Micro Devices issued a warrant for as many as 160 million shares to OpenAI. This translates to about 10% of Advanced Micro’s shares outstanding.
In return, San Francisco-based OpenAI has committed to a large-scale deployment of AMD’s high-performance Instinct line of graphic processing units (GPUs).
While some traders see this deal as a negative for Nvidia (NVDA) , I don’t believe that’s the case. Advanced Micro Devices, Nvidia and Broadcom (AVGO) are all working with OpenAI, as the creator of ChatGPT diversifies its supply chain.
Significant Turnover
AMD’s high of $226.71 occurred soon after Monday’s opening bell. That figure nearly matched the stock’s all-time intraday high of $227.30, set on March 4 of last year.
On the negative side, the stock’s high occurred early in the session. AMD retreated from $226 to close at $203, filling a portion of the morning gap (point B). I don’t expect the remainder of that gap, which extends down to about $170, to be filled in the near term.
The move occurred on AMD’s highest turnover this year (arrow), an indication that institutions are powering this move.
A 93% Gain in Under Five Months
TheStreet Pro readers were advised to initiate a position in Advanced Micro Devices in May at $105 (point A). Shares of the AI chipmaker have nearly doubled since then.
If you’re sitting on a large gain in AMD right now, I understand the desire to take profit. After all, a gain of 93% in under five months is basically a gift, and we don’t want to take it for granted.
If you feel the urge to take profit in AMD, you might want to consider closing just part of the position. This should make it easier to hold on to the remaining shares.
Market Wizard Paul Tudor Jones Weights in
Why keep at least a portion of your AMD shares? Trading legend Paul Tudor Jones made some very bullish comments on Monday. Jones compared the current market environment to 1999, a year that saw the Nasdaq Composite index soar by over 85%.
“Now is much more potentially explosive than 1999,” said Jones. “If you just think about bull markets, the greatest price appreciation is always the 12 months preceding the top.”
Jones anticipates a massive rally before the wheels finally come off this market.
“You have to get on and off the train pretty quick,” said Jones. “If you don’t play it, you’re missing out on the juice; if you do play it, you have to have really happy feet, because there will be a really, really bad end to it.”
Message received, Mr. Jones.
At the time of publication, Ponsi was long AMD, NVDA and AVGO.
