Nvidia Beats Expectations But AMD Flashes Warning Signal
Despite strong earnings, Nvidia sold off on China policy uncertainty. Meanwhile, AMD's 20% overvaluation versus macro fundamentals suggests the semiconductor rally may be overextended, offering tactical shorting opportunities for those betting against AI hype.
Nvidia released their latest earnings overnight & despite producing generally good numbers, the stock sold off. There are issues around sales into China where confusion on official US policy creates huge uncertainty, but generally the company remains in rude health.
If "feels" more like disappointment relative to massively inflated expectations - how much longer can it keep producing these amazing sales / revenues numbers?
Long term players shouldn't let short term noise interfere with their core investment thesis. Note that Nvidia has traded flat or lower on 3 of the last 4 earnings reports but is still up 40% over that period. Stick to your plan!
However, for the tactically minded thinking that the AI hype is vulnerable to a near term correction, eyeQ's model for fellow semiconductor stock AMD is interesting.
Key Macro Stats for AMD:
Metric |
Value |
| Macro Relevance | 67% |
| Model Value | $136.30 |
| Fair Value Gap | +18.44% |
Its back in a macro regime for the first time since March & sits almost 20% rich to our $136.30 macro fair value. That's enough to fire a new bearish signal.
The chart below captures the story. Macro conditions have been improving but the summer rally has extended too far, too fast. And now both eyeQ model value & the spot AMD price itself are showing signs of potentially forming a near term top.
It may be a tactical move only within a broader bullish picture for chip stocks but, from the macro perspective, the risk-reward is skewed to the downside here.
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