We see a driver for AMD shares – and find out what's behind the ongoing market rally

ByVanessa

Oct 10, 2024 #Advanced Micro Devices Inc, #Breaking News: Markets, #Broadcom Inc., #Business News, #Homestretch, #Honeywell International Inc, #Investment Strategy, #Jim Cramer, #Markets, #Morgan Stanley, #NVIDIA Corp, #S&P 500 Index, #Wells Fargo & Co

We see a driver for AMD shares – and find out what's behind the ongoing market rally

Every weekday, CNBC Investing Club with Jim Cramer publishes Homestretch – an actionable afternoon update just in time for the final hour of trading on Wall Street. Markets: The S&P 500 rose to a new record high on Wednesday. There was no specific trigger for the move, but we see a continuation of a theme we highlighted. As oil prices fell and the Chinese market gave up more of its recent gains, US stocks were able to recover unhindered. The market held on to gains after minutes from the Federal Reserve's September policy meeting showed there was disagreement among central bankers over how aggressively to cut interest rates last month. The Fed ultimately opted for a massive 50 basis point rate cut to begin its rate-cutting cycle – with only one member of the Monetary Policy Committee formally voting against it. “Some participants noted that they would have liked to see a 25 basis point reduction in the target range at this meeting, and several others indicated that they could have supported such a decision,” the minutes said. As of midday Wednesday, the market saw about an 80 percent chance of a rate cut of a total of 50 basis points before the end of the year, according to CME Fed Watch. Rising Stars: Financial stocks led the market higher, and it had already been a few days before last Friday's jobs report came in stronger than expected. Club name Morgan Stanley hit another multi-year high – sitting a tick below its intraday record set in February 2022 at the session's highs. Morgan Stanley delivers earnings on October 16th. Wells Fargo, our other bank stock, was unchanged on Wednesday from its earnings release on Friday morning. Honeywell received a solid response after the industrial group announced plans to spin off its advanced materials business on Tuesday. CEO Vimal Kapur explained the reasons for the spin in an interview on CNBC's “Squawk on the Street.” Kapur said: “We cannot deliver strong growth momentum if our portfolio is not right.” He added: “Expect further portfolio work to be done in 2025 and beyond.” Chips: Semiconductors were mixed, with club stocks Nvidia and Advanced Micro Devices fell slightly, while Broadcom hit a new all-time high. AMD is hosting its Advancing AI event on Thursday starting at 12 p.m. ET. Last week, analysts at Bank of America said the presentation could be a “catch-up catalyst” for the stock. Following the company's AI presentation last December, the stock rose 19% in a month. AMD is expected to unveil new products at Thursday's event, including the MI325 accelerator and the Turin CPU. However, what appears to be up for debate are questions surrounding forward guidance. Details about AMD's product and roadmap are exciting, but the Street always wants to know what its current sales are. It sounds like The Street expects AMD to raise its full-year AI revenue forecast to more than $5 billion, up from $500 million that management had forecast in July. The company's ability to raise this outlook gave us the confidence to continue buying AMD when the market focused on AI stocks in early August. However, with earnings due later this month, Wedbush analysts said Wednesday that they expect management to wait until earnings to adjust forecasts. Beyond this year, Wedbush wonders whether AMD will provide an AI revenue target for 2025. They said The Street is targeting sales of about $10 billion next year, and their estimates are slightly higher than that number. Outside of the forecast, Wedbush wants to know whether AMD will announce another major customer for its AI chips. We know that big tech companies are hungry for computing power for AI workloads and that AMD can already name Oracle and Club Names Meta Platforms as well as Microsoft as big customers. Wedbush is also eager to see whether AMD will provide further insight into its acquisition of ZT Systems, which was announced in August. Next: There are no major gains after the closing bell on Wednesday or the open on Thursday. The September CPI, to be released before the bell on Thursday, is expected to show further slowing inflation, with consensus expecting a 2.3% rise from 2.5% a year ago. PPI comes out on Friday. (A complete list of Jim Cramer's Charitable Trust stocks can be found here.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation's portfolio. If Jim discussed a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION SET FORTH ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH OUR DISCLAIMER. THERE ARE NO fiduciary duty or duty IN RECEIVING YOUR INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.

Every weekday, CNBC Investing Club with Jim Cramer publishes Homestretch – an actionable afternoon update just in time for the final hour of trading on Wall Street.

By Vanessa

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We see a driver for AMD shares – and find out what's behind the ongoing market rally

ByVanessa

By Vanessa

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