The Recent Drop in AMD's Stock Price Is an Overreaction

The Recent Drop in AMD's Stock Price Is an Overreaction

Shares of Advanced Micro Devices (NASDAQ: AMD) have taken a  beating in recent trading sessions, with the stock down 21% since Oct. 23. First, a negative analyst note from Citi Research dented investor confidence going into the company's third-quarter results. Analyst Christopher Danely slapped a $5 price target on the stock that closed Oct. 23 at $14.10 and reiterated his "sell" rating, citing intense competition after the recent launch of Intel's (NASDAQ: INTC) eight-generation processors.

Then, investors pressed the panic button despite AMD's terrific quarterly report and consensus-topping guidance on Oct. 24 , sending the stock down more than 13% after the results were released. This makes it evident that investors are having second thoughts about the chipmaker's ability to deliver growth in the face of increased competition from the likes of Intel and NVIDIA, who have released new chips to arrest AMD's rise.

But a closer look makes it clear that the recent stock price crash could be an opportunity in disguise.

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Source: Fool.com