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Buy AMD Stocks 67% of retail CFD accounts lose money

How To Buy AMD Shares

Updated: 3 Aug 2021

While the big US tech giants catch the headlines, a group of smaller firms can offer improved growth prospects and share price gains. Being up-and-coming can be an advantage as there is much more room for future expansion. One stock that is catching the eye of investors is AMD. The firm is small enough to be able to adapt to recent sector-wide issues affecting the computer semiconductor sector but large enough for online brokers to provide markets in it. The firm’s prospects, and the fact that some brokers are currently offering commission-free trading in AMD shares mean, for many, now is the time to buy.

AMD Shares: The Basics

Advanced Micro Devices Inc (AMD) is a California-based US multinational manufacturer of computer processors, motherboard chipsets, processors and related technologies. It provides the integral elements of servers, PCs and mobile phones and is listed on the Nasdaq exchange under ticker AMD. It has a market cap in the region of $100bn.

Recent and Historical Market Performance

Past performance is no guarantee of future returns, but the AMD share price chart demonstrates the firm’s position as one of the tech sector’s success stories.

AMD Share Price eToro Chart

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In tech terms, AMD has been around a long time. The firm first listed on the NYSE in 1979, but as the Nasdaq exchange grew to become the natural home of tech stocks, AMD, in 2015, switched from one exchange to the other. The stock-split adjusted price at the time of the initial IPO was $0.59 and those looking to buy AMD shares will now have to stump up $85 per share. If you’d bought AMD back in 1979, you’d now be sitting on a 144-fold return.

The staggering share price rise has borne the characteristics of many tech stocks, with there being as many hair-raising price slides as barnstorming bull runs.

When the millennium stock bubble burst in 2000, the AMD valuation plunged 37% in the space of one month. As recently as September 2020, the AMD share price crashed 16.2% in less than 48 hours. Those able to ride out the bumps have generally been rewarded. In the second half of 2020, AMD investors saw the firm’s valuation sky-rocket by more than 60%.

The all-time-high share price of $99.98 was recorded in January 2020 and the pull-back in price since then points to the psychologically important $100 per share price level offering some resistance to further upward momentum.

Is it a Good Time to Buy AMD Shares?

That pull-back in price and the challenge of breaching the $100 milestone are, from a technical analysis perspective, reasons to buy now. On three occasions since January 2018, the AMD share price has pulled back to the region of the 50 Simple Moving Average on the daily price chart. Each time, the 50 SMA provided support and acted as a platform for renewed share price vigour.

AMD Chart Pull Backs

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Nothing can be guaranteed, but if price was to rally and breach the all-important $100 level, then there would be room for continued share price growth.

From a fundamental analysis perspective, there are reasons to believe the firm’s business operations could be about to provide a catalyst for a price surge.

In its 2021 Q1 earnings release, AMD reported it was taking over market share from its larger rivals. Mark Tepper, president of Strategic Wealth Partners, tips the more agile AMD to work around some of the supply-chain issues impacting the chip sector and said:

“When you look at AMD versus Intel, AMD has got better innovation, better performance, better price point and they’ve probably got like a two- to three-year competitive lead on Intel.” Source: CNBC

The global shortage in supply of semiconductors is reaching crisis point and AMD’s ability to still maintain production levels means it is the semiconductor stock of the moment.

Steps to Buy AMD Shares

Online brokers have revolutionised the investment industry. Their user-friendly platforms are designed to make it easy for beginners to set up accounts and trade. There are some common-sense ground rules, which even experienced traders abide by as these help cut back on certain kinds of risks. Whether you want to sell or buy AMD shares, the step-by-step process of getting into the market has never been easier.

1. Choose a Broker

The first task is choosing a broker. The fact that there are so many good brokers available to choose from is both a hindrance and a help. This shortlist of AskTraders-reviewed trusted brokers is a good place to start as all of the candidates are regulated by at least one Tier-1 authority.

If you’re considering a broker that is not on this list, then it’s essential you check its regulatory status. Market risk, the chance that price goes against you, is one thing, but given the number of scammers in the market, make sure your chosen broker is regulated by one of the below.

  • The Financial Conduct Authority (FCA)
  • The Australian Securities and Investments Commission (ASIC)
  • The US Securities and Exchange Commission (SEC)
  • Cyprus Securities and Exchange Commission (CySec)

You don’t have to sign up with a US broker to trade US shares. If you want to buy AMD shares from the UK, you can choose a UK-based broker, fund your account using GBP and leave the broker to sort out the behind-the-scenes processes which give you access to the Nasdaq.

If you’re not yet certain that you want to invest in AMD shares, another option is to try out a free demo account. These simulation accounts take live market feeds and replicate the trading experience but use virtual funds. They’re a risk-free way of practising trading and trying out the different brokers, which will all have areas on their homepage where you can set one up.

eToro Create Account

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2. Open & Fund an Account

Opening a live trading account requires more personal information to be shared to ensure only you have control of your funds. The process still takes only a matter of minutes to work through. It’s all done online and you can sign up for an account using a desktop device or via a handheld device.

There are a variety of ways to pay funds into your new brokerage account. These include bank transfers and debit or credit cards, but if you’re in a hurry to buy AMD shares, it’s worth noting the T&Cs, as some payments are credited instantly while some transfers can take up to 24 hours to process.

Best Brokers to buy AMD Stocks:

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Trader Rating
Take a look

Tickmill: FCA Regulated

Trader Rating
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IG: Over 16k stocks to trade

Trader Rating
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If you are ready to add some AMD stocks to your portfolio you'll need a broker that is regulated, has low fees and a user-friendly platform. Finding one can be a daunting task, which is why we've selected some of our favourites that tick all of these boxes to help you get started.

3. Open an order ticket and set your position size

With your account set up and funds sitting in it, it’s time to visit the trading area of the site and locate the market in AMD shares. Once there, you’ll find news and research on AMD so that you can run last minute checks. The live price chart will help you get a feel for current market conditions. Sites such as eToro, which support social trading will have a feed of the latest comments from other traders, so you can draw on insight from those who already have skin in the game.

AMD eToro Feed

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The trading interface has data fields where you input the amount of shares or cash you want to trade. There are also buttons to allow you to confirm the direction of your trade, depending on whether you want to buy or sell AMD stock. The basic principles of trading really are that simple.

4. Set your stops and limits

Some more sophisticated features of the trading process include Stop Loss and Take Profit orders. These are instructions built into the system to close out some or all of your AMD position if price reaches a certain level. The platform will implement your trading instruction automatically, which means managing the risk associated with price moves doesn’t involve you watching the market 24/5.

If you’ve decided to go long AMD shares and are following a buy-and-hold strategy, then you might want to consider managing risk in other ways. Trimming your order size to a low level can take the emotion out of trading and allow you to not trade with ‘stops’. That way, if the market suffers a flash crash, you won’t get kicked out of a position at a loss to see price only return to pre-flash levels. AMD is a volatile stock, so heeding the advice to only trade an amount of funds you can afford to lose completely is a good idea.

Buy AMD Set Order eToro

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5. Select & Buy AMD Shares

Once you’ve input all the required information, all it takes to buy AMD shares is a click on your mouse or a tap of the screen.

After executing the trade, it’s worth following two common-sense tips from experienced traders:

  • Check you are buying the shares outright and not in Contracts for Difference (CFD) form. CFDs are a great instrument and offer great flexibility. They’re particularly popular with traders running short-term strategies. But if you’re looking to buy AMD shares and hold them for more than a couple of weeks, then it will likely be more cost-effective to buy AMD shares outright. This article explores that subject in greater detail.
  • Check your trades. Simple errors such as inputting the wrong amount of shares to buy are best corrected before the market price moves too far.

Fees When Buying AMD Shares

The good news is that the boom in online trading and influx of new brokers has resulted in fierce competition between brokers, which has driven down trading costs.

The below chart details trade execution costs at trusted brokers. Brokers make most of their money on the difference between the buy and sell prices – the bid-offer spread is a key number to look for. Separate ‘commissions’ have been largely done away with, but inactivity fees and financing charges, which are outlined in the T&Cs, are also worth factoring in.

eToro Plus 500 Markets.com AvaTrade IG
Live Account Fee No charge No charge No charge No charge No charge
Demo Account Fee No charge No charge No charge No charge No charge
Bid Offer Spread – AMD shares 9c 44c 20c  12c 2c
Cash Deposit Fee No charge No charge No charge No charge No charge
Cash Withdrawal Fee Yes – $5 per transaction No charge No charge No charge No charge
Inactivity Fee Yes – $10 per month after 12 months inactivity Yes – $10 per month after 3 months inactivity Yes – $10 per month after 3 months inactivity Yes – $50 per quarter after 3 months inactivity Yes – £12 per month after 24 months inactivity
FX Conversion Fee Offers accounts in USD, only Offers accounts in USD, GBP and EUR Offers accounts in 14 base currencies incl. USD, GBP, EUR Offers accounts in USD, GBP, EUR, CHF Offers accounts in 6 base currencies, including USD, GBP and EUR
Minimum Deposit $200 (or equivalent) $100 (or equivalent) $250 (or equivalent) $100 (or equivalent) $250 (or equivalent)

If you’re trading in any size, then it’s worth remembering that finding a good fit broker can be more important than signing up with the cheapest. If your broker releases a piece of research that helps you protect your P&L, then that is likely to outweigh any marginal differences in costs.

Full Overview of AMD

Niche and History

AMD is a ‘techies’ tech-stock. Unlike firms such as Apple, its success is not based on the appearance of its products and a lot of clients may not even be aware they are using AMD products in their everyday on-screen experience.

AMD’s origins date back to the late 1960s when Jerry Sanders and a group of his workmates from Fairchild Semiconductor set up their own company. In 1969, it released its first product and has been building its market share ever since. AMD currently accounts for approximately 7% of the US server market.

Financial Overview

Recent global shortages in computer chips have left manufacturers scrabbling around to protect their supply chains. AMD uses the Fabless business model and has been one of the winners in the situation. Its outsourced approach has proved reasonably reliable and a corresponding uptick in demand caused by COVID-19 lockdowns and more people working from home has seen AMD able to expand its profit margins.

AMD eToro Stats

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AMD Enterprise Value EBITDA – 60.38
AMD Earnings Per Share (EPS) – 2.034
Profit Margin – 25.50%
AMD P/E ratio – 41.89 The five-year average P/E ratio for the Nasdaq 100 index is currently 37.55.
AMD Share Dividends – AMD does not pay dividends, nor does it currently engage in share buy-backs. Instead, it reinvests its profits into new investment projects.

AMD Ethical Rating

Any industrial process is going to leave some kind of a footprint on the world’s resources, but AMD can counter that argument by bringing in a wider range of metrics. Hi-tech devices have, for example, allowed more people to work from home and cut down on their commutes. New technological advances also have an eye on energy use.

Environmental Impact

In terms of the direct management of its operations, AMD scores very highly. It has a CDP Climate Change rating of B. Its CDP Water Use rating is also B and it scores 100% in terms of corporate equality.

One key area for the firm is ensuring its suppliers and sub-suppliers comply with AMD’s own approach to responsible processes. To tackle this issue, the firm has ensured that all of its suppliers are either eligible, in-process or have already completed an independent audit as part of the Responsible Minerals Assurance Process.

Treatment of Workers and Local Communities

One stand-out plus point for AMD is that the firm’s CEO is female. Lisa Su took over the top job in 2014 and has pioneered the role of women by playing a leading role in turning around the fortunes of AMD. During her time in charge, AMD stock has increased in value 20-fold.

AMD is particularly progressive in terms of gender equality. The Human Rights Campaign in 2020 marked it out as having best practice on a report card on lesbian, gay, bisexual and transgender equality in corporate America.

It is also fully signed up to the Modern Slavery Act of 2015 and has strict policies regarding child labour and forced labour. It ensures compliance by carrying out audits of its suppliers.

Ethical Initiatives

With branding being such an important part of the AMD offering, it’s unsurprising that the firm has invested considerably in a range of welfare initiatives. It has dedicated teams that focus on advancing the firm’s policies on sustainability, digital wellbeing, human rights, crisis response, unwanted software and diversity and inclusion.

Controversies

One blemish on the AMD profile is the excessive pay of its CEO, with Su taking home total compensation of $58.5m in 2019. Given the technical nature of its operations, even entry-level staff are relatively well qualified and remunerated, but the CEO-staff pay ratio of 604:1 stands out.

There have also been some technical glitches with AMD’s product range. The firm is accused of overstating the capabilities of its AMD Ryzen technology and some chips have been identified as vulnerable to hacking.

Summary

The beauty of the AMD situation is that the time to buy AMD shares is now. The firm has an impressive history, but more crucially, external and internal factors have recently aligned to generate a range of ‘buy’ signals.

The firm has a dynamic and well-respected CEO who has been in the job for seven years. Growth forecasts are sky-rocketing and it’s doing one of the best jobs of navigating the global chip shortage. The incumbent market leader, Intel Inc, is in contrast struggling and could well see more market share pass to the smaller and more dynamic AMD.

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