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Santa Clara, California-based semiconductor designer Advanced Micro Devices, Inc (AMD) is experiencing an unprecedented rise in its short interest after its share price touched record highs a couple of weeks back. AMD has consistently delivered strong annual profit and revenue growths in its quarterly earnings reports, and the market seems to have rewarded the company by pushing its share price even higher; an event also likely triggered by rumors of its alleged guaranteed success for the highly-anticipated acquisition of Xilinx Corporation.
However, as the share price rises so does AMD's short interest, a metric that measures bearish or negative market sentiment against a stock. Multiple data sources suggest that the short interest in the company is now touching levels that it saw earlier this year, and with the recent tussle between retail and institutional investors over stocks such as GameStop and AMC Entertainment, many also worry that AMD might be up for some additional limelight.
AMD Short Interest Stood At 89 Million Shares At End Of July According To Exchange Data
Data from the NASDAQ exchange, which shows the short interest until the end of July reveals that by then roughly 89 million AMD shares were sold 'short' on the market. In financial terminology, shares sold short are ones that have been borrowed by investors and sold at a higher price with the hopes that a stock price drop will enable them to buy them at lower prices and keep the remainder after returning the borrowed amount to their owners.
The staggering rise in AMD's short interest is clear when we look at the shares sold short in August last year. NASDAQ's data reveals that by the end of the month's second week, AMDs short interest stood at roughly 45 million. This shows that in a little less than a year, the value has doubled, while AMD's share price, which closed at $81.30 in the second week of August last year, has only increased by 30% to close at $106 yesterday.
Data available on aggregator Koyfin reveals that the short interest at the end of July was roughly 87 million shares, a reading similar to NASDAQ's for mid-July. For August, the platform uses NASDAQ's July closing value as well, but it's the comparison with historical short interest values which reveals the striking nature of recent trends.
The last time short interest in AMD touch 89 million shares was in January last year, when the world was in the early stages of finding out about the ongoing pandemic. Since then, the short interest followed a downward trend, as it bottomed out in mid-October last year after touching a thirteen-year low value of 26.6 million shares.
However, within nine months, AMD's short interest has now grown by 234% and by the looks of it, it is on an upward trajectory. The NASDAQ's next set of data will be available soon, allowing us to determine whether more investors will risk betting a share price drop for the Santa Clara, California chip designer.
AMD's latest earnings report saw the company post a staggering 99% revenue growth year-over-year. However, sequential growth remained less than impressive but still stood at a healthy 12%. AMD attributed its success to strong sales of the Ryzen 6000 central processing unit (CPU) lineup and higher average selling prices (ASPs) for its processors and GPUs. The company's data center sales also grew, at a time when its larger rival Intel Corporation posted a drop in the segment.
