Advanced Micro Devices Inc. (NASDAQ: AMD) is set to report earnings after the close of trading on July 21, 2016. AMD has long been a controversial tech player and is nothing short of a major battleground stock for bulls and bears to bitterly fight over. 24/7 Wall St. recently featured how many analysts have been changing their tune on AMD’s future around graphics today and virtual reality ahead. With a fresh new launch and with shares having risen massively, AMD shares could see a big move up or down after the earnings report is digested.

The first thing to consider is not just the excitement of a turnaround from a company that has historically been challenged in successfully turning around. A more specific issue may be how much the stock has risen ahead of earnings. AMD shares were last seen up 88.5% so far in 2016. From a year ago, AMD shares are up some 200%, but in the past week and month the gain has been about 6%.

Whether you are an AMD bull or bear depends largely on where you see things going from here. AMD won the GPU business for the PS4 and the Xbox 360, but the server push, virtual reality, learning and artificial intelligence have been the drivers of late. It is that last group that has driven so much investor excitement.

What is interesting is that much of the earnings release may not be viewed that closely when compared to other companies. Cash management and controlling losses may matter more than whether AMD revenues or earnings per share compare. Again, AMD’s story is on what is ahead rather than just how its sales earnings have been.

Thomson Reuters has consensus estimates for the second quarter of −$0.08 in earnings per share (EPS) and $951.3 million in revenues. For the third quarter, those estimates are −$0.03 EPS and $1.12 billion in revenues. Estimates for 2016 and 2017 are as follows:

• −$0.26 EPS and $4.03 billion in revenue in 2016
• −$0.11 EPS and $4.24 billion in revenue in 2017

Where the AMD story gets interesting is in 2018 and 2019 estimates. Analysts now have a consensus 2018 year coming in with $0.05 EPS on almost $4.4 billion in revenue, followed by $5.25 billion in revenue and $0.32 EPS in 2019. The farther out you go, the fewer estimates there are making up the consensus estimates, but this still would imply a valuation of 16 times expected 2019 earnings.

It is always hard to know what short sellers are thinking. There can be multiple reasons to short a stock, above and beyond merely betting that the stock is heading lower. That being said, its June 30 short interest was 76.4 million shares. AMD’s short interest now has five consecutive reports in a row under 100 million shares. Perhaps what stands out even more is that this most recent report was the smallest short interest in AMD in well over a year.

Options traders, at least based on the next day’s expiration, are braced for a move of about 10% or more in either direction. Playing both sides of the speculative options for the following day’s expiration would require a move down to $4.60 or up to $5.90 to be profitable.

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24/7 Wall St. recently showed how Bernstein was worried that AMD had run far too high. That being said, that article also need to be balanced by showing how many analysts raised expectations just in the prior weeks. Wells Fargo talked up the launch of AMD’s first Polaris-based graphics processor and raised its valuation range to $5.50 to $6.50 from a prior $4.00 to $4.50 range.

AMD shares were =trading down 3.3% at $5.24 on Thursday ahead of the earnings report. Its market cap is a mere $4.16 billion, and its 52-week trading range is $1.61 to $5.57.

Stay tuned.

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