Advanced Micro Devices Inc. (NASDAQ: AMD) is an American multinational semiconductor company that serves both consumer and business markets by developing computer processors and related technologies. It is headquartered in Santa Clara, California, United States. It was founded in 1969 and went public in 1972.
If you want to buy shares in a company at the forefront of the microchip industry, this step-by-step guide will take you through the process.
New to trading the US markets? Read our complete guide to buying US stock.
About the company
As a global semiconductor company, AMD produces x86 microprocessors (CPUs), accelerated processing units (APUs), discrete graphics processing units (GPUs), semi-custom System-on-Chip (SoC) products and chipsets for the personal computer (PC), gaming, and data centre markets.
Of AMD’s two key business segments, the Computing and Graphics segment includes desktop and notebook processors and chipsets, GPUs, data centre and professional GPUs, and development services. The Enterprise, Embedded, and Semi-Custom segment includes server and embedded processors, semi-custom SoC products, development services, and technology for game consoles.
Subsidiaries of AMD include Advanced Micro Ltd., AMD Corporation, AMD Malaysia LLC, and AMD (EMEA) LTD. AMD Far East Ltd., AMD International Sales & Service, Ltd., and AMD Latin America Ltd., are all based in the US. AMD also has more than 30 other international subsidiaries.
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Step 1: Find a broker
Find an online broker that allows you to trade shares listed on US markets. There are many options available in Australia.
These are just some of the factors to be aware of when looking for a broker.
Trades without commissions
Access to the US market
AMD is listed on the NASDAQ in New York. Whatever broker you decide to use will need to have access to this market if you want to invest in AMD.
Brokers who offer fractional shares can let you buy a fraction of the share, instead of buying the entire share. This makes it easier to diversify your holdings, and may be worth considering since AMD shares are currently trading above US$100 each.
Easy trading interface
It shouldn't take long to trade shares. Make sure you choose a broker that has an intuitive interface you can use with no steep learning curve.
Research and analysis
A trading platform with a robust research and analytics section allows you to make decisions based upon price history, market updates, and quarterly earnings reports. Some brokers even offer analyst recommendations.
Step 2: Transfer funds to your trading account
You will need to fund your account before you can start buying shares. You should be aware that funds can take time to clear. This means that it’s unlikely you will be able to trade immediately.
Step 3: Set a budget for investing
Because shares can be volatile, you should only allocate money you are willing to lose.
You might consider investing in fractional shares. This gives you more freedom and you won't need to spend more than your budget allows.
Step 4: Decide whether to purchase shares or invest via ETFs
An Exchange Traded Fund (ETF) is regarded as a diversified investment and safer than investing in a single share.
ETFs with exposure to AMD include Invesco Dynamic Semiconductors ETF (PSI), VanEck Vectors Video Gaming and eSports ETF (ESPO), Invesco QQQ Trust (QQQ), SPDR S&P 500 ETF Trust (SPY), iShares Core S&P 500 ETF (IVV), and Vanguard S&P 500 ETF (VOO).
Step 5: Spec your order
There are many order types you can choose from, and you can customise the price and time for each share. Consider these different order types.
Market orders are orders which can be bought or sold at current market prices. However, the actual price you receive at execution may be different from the one that was offered to you at the time you placed the order.
This type of order allows you to automatically sell your shares at a price you nominate, or higher, but not lower. However, if the market is moving quickly against you, the order may not be executed if the price falls past your limit price.
This allows you to decide a low price at which, if reached, you would prefer to exit your investment. It is used often to defend a trade position from market volatility. A stop loss could be set at US$32 per share, for instance. Your stop loss order is executed automatically if the price falls below this level and your order will be filled at the next available market price.
Step 6: Submit the order
Once you've chosen a broker, and determined how you want to invest in your shares, you are ready to place your order.
Whether you invest in shares with a speculative motive or to hold them over the long term, you need to keep track of the company’s performance and its share price movements.
Watch for developments in the semiconductor industry
Because AMD is a global company in a highly competitive field, you need to monitor what goes on in the semiconductor industry.
AMD has focused on investing in manufacturing capacity and seeking potential suppliers to mitigate disruptions, giving it capacity in an industry that has been plagued by shortages.
Continuing success may be disrupted by a deterioration of the relationship between Taiwan (where its key supplier is based) and China.
AMD's key competitors are Intel (NASDAQ: INTC) and NVIDIA (NASDAQ: NVDA). Intel competes with AMD in microprocessors and NVIDIA in GPUs. Other competitors of AMD include Marvell Technology, Qualcomm, and Synopsys.
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