Investing Club: Magnitude of AMD pullback even in down market seems excessive

Published Fri, Feb 11 20222:26 PM ESTUpdated Fri, Feb 11 20224:02 PM EST

Selling pressure in the market really started to pick up after Friday's Morning Meeting , so we want to provide a quick update on a Club stock we're monitoring into this decline. Shares of Advanced Micro Devices (AMD) closed down 10% Friday, to $113, despite no news from the company. We are not sure exactly what is causing this sharp selloff in AMD but we have a few good ideas. One reason could be that AMD has a high price-to-earnings multiple, and high multiple stocks tend to get crushed when investors worry about Federal Reserve interest rate hikes. There are also growing concerns that Russia may soon invade Ukraine. If this does happen, expect selling in a whole bunch of stocks — except companies exposed to oil and gas as like Club names Chevron (CVX) and Devon Energy (DVN). Another reason for Friday's volatility could be due to the upcoming closing of the Xilinx acquisition, an all-stock transaction. Either way, we think this sharp of a pullback looks excessive, especially after the company posted a stronger than expected quarter and provided 2022 guidance well above expectations. After talking to CEO Lisa Su last Friday at our special Monthly Meeting , we felt as confident as ever in her product roadmap. We think today's pullback is as good as any to buy some if you haven't already, but leave plenty of room for Monday in case geopolitical tensions ratchet up over the weekend. (Jim Cramer's Charitable Trust is long AMD. See here for a full list of the stocks.) As a subscriber to the 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 trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Lisa Su, president and chief executive officer of Advanced Micro Devices Inc. (AMD).

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Selling pressure in the market really started to pick up after Friday's Morning Meeting, so we want to provide a quick update on a Club stock we're monitoring into this decline.