Mani:
"I don't understand this rally in the semi's. Eventually bad news will be interpreted as such."
My take (which may not surprise you) is that the bad news and more is already factored into AMD...
Looking forward, recovery signs are on schedule (PC market stabilizing according to both AMDand INTC) given that it has been 6 months since the first fed rate cut back in January...The first fed rate cut has been followed by a series of aggressive additional cuts over the succeeding 5 month interval, and if history is any guide this time round, one can anticipate an equally aggressive bounce off the current economic bottom over the ensuing 6 months, as recovery generally lags fed action by 6 to 9 months...The market, according to many, looks ahead 6 months, and if the foregoing scenario pans out, then one can anticipate a significant rally in the general indices carrying the DOW to 14000, the Nas to 3000 plus and the SOXX to 900 plus over the remaining part of the year as visibility going forward for companies begins to, once again, look at improving earnings off the current q2 bottom...Current P/E's, on the basis of upwardly revised outlooks 3 to 6 months out may well be readily justified at current levels...
Certainly, in such an improving environment, imo, a P/E three times its current, can be justified for AMD who has weathered the economic storm of the past 12 months better than any other tech company that I'm aware of...
Mani, there have to be 1000's of stocks for which there exists 100 times more reason for shorting than AMD...AMD's price looks poised to explode upwards over the next while from both a technical and fundamental perspective... |
