We are buying 50 shares Advanced Micro Devices at roughly $155.36. Following the trade, Jim Cramer’s Charitable Trust will own 350 shares of AMD, increasing its weighting to 1.63% from 1.4%. Chip stocks and other technology names initially got off to a solid start in Thursday’s session in response to strong quarterly results from Taiwan Semiconductor Manufacturing Company , but the heavy sellers have come back and knocked them back down. You can point to several reasons why the chip trade has suddenly become out of favor. Wednesday’s sell-off was on worries about possible stricter chip exports to China from the Biden administration, compounded by the prospect of new tariffs on China under a second Donald Trump presidency and critical comments about Taiwan from the Republican nominee. There’s also been a rotation out of secular growth and AI stocks and into companies that benefit more from future interest rate cuts. Let’s also remember the simple fact that the market made a huge move over the last six weeks and was due for some profit-taking. We know this by looking at how overbought the S & P Short Range Oscillator , our trusted momentum indicator, has been for the past week. That overbought condition is slowly working its way off. It’s been painful the past few days to fight this rotation by adding to our AMD position, but we’re going to keep holding our nose and do some buying. After restarting a stake in the chipmaker Monday , we also bought additional shares on Tuesday and Wednesday . We’ve been prepping for the broadening out rotation with a handful of buys in out-of-favor names over the past few months. Now that tech is being thrown out by the market, we think we’re getting an opportunity to get more exposure to the group. These stocks have become tough to own in the short-term due to the risks mentioned above, but we don’t think spending on AI is going away anytime soon. And due to this week’s sell-off, AMD shares are now trading around their lowest levels since May. They also have given back nearly all their year-to-date gains despite AMD having a fast-growing AI accelerator business that will carve out a chunk of what CEO Lisa Su believes is a $400 billion total addressable market for data center AI chips by 2027. The return to growth in PC sales should also boost AMD’s earnings over the next few years. (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.
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