- AMD could be benefited if Bitcoin’s rally continues
- As Bitcoin expands demand for ASIC miners grows as well
Although chip stocks didn’t have a good month, AMD continues to grow fuelled by Bitcoin’s price increase over the last months. AMD has risen more than 1% in May according to CNBC, shaking off the SMH semiconductor ETF’s 14% slump. At the same time, AMD has grown 102% over the last 12 months and the SMH ETF fell 8%.
Bitcoin Resurge Helps AMD Stock Grow
AMD has been performing very well during the last few months. According to Boris Schlossberg, managing director of FX strategy at BK Asset management, AMD is “the star that shines within the SMH group.” As he mentioned during CNBC’s Trading Nation, analysts say that AMD has a better product than Intel for the first time in 50 years. This is why they are also gathering the attention of investors.
Mr. Schlossber believes that the strong rally experienced by Bitcoin has also had an influence on AMD’s stock. He mentioned that if Bitcoin surges above $10,000 this should be a tailwind for AMD because mining activities in the crypto industry will also expand.
AMD graphic cards can help Bitcoin miners to become more efficient since they require fast processors. If the demand for these hardware devices to mine digital assets grows, also the need for AMD chips. And as the virtual currency moves above $8,000 and $9,000, the demand is expected to grow. Indeed, according to blockchain.com, the Bitcoin hash rate is reaching its all-time high, which means that there are more and more ASIC miners connected to the Bitcoin network processing transactions.
Matt Maley, an equity strategist at Miller Tabak, commented about it:
“The semis have sold off very hard this month. They’re getting oversold. They’re just below their 200-day moving average but not enough to really cause a major problem. They could see a little bit of a bounce here in the near term, especially since Intel, which is by far the biggest weighting in the SMH with a 12% weighting, it’s incredibly oversold.”
As CNBC shows, the SMH ETF’s relative strength index is currently close to 33 and Intel’s RSI is close to 35. Levels close to 30 or under are considered oversold.
Maley went on saying that on a long-term basis, the SMH is not very oversold. According to him, the index still has some more downside over time.