According to media reports:
→ The deal involves AMD supplying processors of various generations to support the deployment of artificial intelligence infrastructure with a total capacity of 6 gigawatts.
→ The partnership is expected to generate billions in revenue for AMD starting in 2026.
→ Barclays analysts have raised their price target for AMD shares from $200 to $300.
The major announcement fuelled a sharp rally of around 30% in AMD’s share price, though this surge triggered aggressive selling pressure near the historic peak around the $227 level.
Price action analysis shows that:
→ The trading session opened with a wide bullish gap, breaking through the key psychological level of $200.
→ The price also surpassed previous resistance levels at $180 and $190.
→ During the session, the price pulled back, forming two large bearish candles on the four-hour chart.
A reasonable interpretation:
→ The initial reaction was highly emotional, but the optimism is fading quickly.
→ The price movement indicates strong bearish activity following the sharp rise.
Selling pressure is being driven by:
→ Investors locking in substantial profits now, as the deal’s financial impact will unfold gradually over time (creating future opportunities to re-enter at lower prices).
→ Technical signs of an overbought market.
Signs that AMD shares may be overbought include:
→ The RSI indicator, which exceeded 80 yesterday.
→ The price opening significantly above the upper boundary of the ascending channel.
Short-term: Bearish activity could drive a correction towards:
→ The median line of the ascending channel, where demand and supply typically balance.
→ The psychological level of $200, which may influence sentiment among traders reacting to the news.
Long-term: AMD shares remain fundamentally attractive, given that:
→ The AI boom continues to serve as a major growth driver.
→ Market participants expect the Federal Reserve to begin cutting interest rates.
