The S&P 500 and NASDAQ 100 both closed at a record high Friday, boosted by optimism that a second round of negotiations between the United States and Iran could soon resume, coupled with a strong start to earnings season. Geopolitical tension will likely dominate investor sentiment again this week. Investors will also monitor key earnings reports from Magnificent Seven members Alphabet, Amazon, Meta, Microsoft and Apple, as well as the Federal Reserve’s policy decision on Wednesday.
S&P 500 Technical Analysis
The S&P 500 Index consolidated within a pennant-like pattern most of last week, before breaking out to a fresh record high on Friday. The relative strength index confirms bullish momentum, though the indicator sits in overbought territory, increasing the possibility of near-term profit taking.
During retracements, investors should watch key support levels located around the psychological 7,000 area and lower at 6,760, a location on the chart currently between the 50-day and 200-day moving averages.
Investors can use bars pattern analysis to project a bullish target by taking the bars comprising of the bullish advance that preceded the pennant and overlaying them from Friday’s breakout area. This forecasts a continuation move to around 7,930, about 11% above current levels.
Nasdaq 100 Technical Analysis
The Nasdaq 100 Index broke out from an extended trading range earlier this month, before closing at a record high on Friday. Like the S&P 500 Index, the relative strength index flashes an overbought reading, confirming positive momentum, but also cautioning investors of heated conditions.
Profit taking could see a pullback to major support levels at 26,180 and 25,200. Meanwhile, further buying pressure could propel a near-term rally toward 28,536. We project this upside target by taking the 9% measured move from the prior trading range and applying it to this month’s breakout area.
Below, we take a closer look at three chip stocks that rallied to new highs last week as investors rotated back into risk-on names amid growing expectations of a breakthrough in negotiations between the United States and Iran.
Intel Fundamental Analysis
Intel is one of the world’s largest chipmakers and a legacy player in CPUs for PCs and servers. The company operates a vertically integrated model, designing and manufacturing its own chips, while aiming to build out its foundry business to compete with Taiwan Semiconductor Manufacturing Company.
Valuations have significantly expanded on the back of AI optimism and a turnaround narrative. As of last week’s close, the stock trades at nearly 160 times forward earnings, significantly above its 5-year average multiple of 23 times.
However, execution risk remains high. Intel continues to play catch-up in advanced chips, but the chipmaker’s failure to gain market share against rivals Advanced Micro Devices and NVIDIA could quickly undermine investor sentiment. Moreover, increasing capital expenditure and pricing competition in AI data center CPUs present key challenges that may pressure margins.
Intel Technical Analysis
Shortly after the 50-week moving average (MA) crossed above the 200-week MA to form a bullish golden cross, Intel shares broke out from a flag, a chart pattern that signals a continuation of the stock’s recent bullish momentum.
Indeed, the stock decisively broke out to a new all-time high last week on above-average trading volume, indicating buying conviction from larger market participants. However, the move coincided with the relative strength index moving into overbought territory, increasing the likelihood of near-term profit taking.
During retracements, investors should watch key support levels near $69 and $56 where the stock may attract buying interest near prior swing highs. Meanwhile, follow-through momentum could see the stock rally toward $107.50 based on a measured move that takes the impulsive 115% percentage gain that preceded the flag and adds it to the pattern’s breakout area.
Advanced Micro Devices Fundamental Analysis
Advanced Micro Devices is a leading chipmaker focused on high-performance CPUs and GPUs across PCs, data centers, and gaming. The company, which outsources its chip manufacturing, has successfully executed a multi-year turnaround, helping capture market share in both server and client markets.
AMD’s valuations have accelerated on the back of AI-driven demand and continued data center momentum. As of last week’s close, the stock trades at 52 times forward earnings, nearly an 80% premium to its 5-year multiple of 29 times, reflecting elevated expectations for growth in AI accelerators and server chips.
While AMD has made ground on rivals in recent years, it faces intense competition from NVIDIA’s AI GPUs, where software ecosystem and scale remain key differentiators. Moreover, any slowdown in data center spending or delays in product roll outs could challenge current growth assumptions. The chipmaker next reports earnings after the market closes on Tuesday, May 5.
Advanced Micro Devices Technical Analysis
After breaking out above the prominent November and January peaks, AMD shares have continued to gain upside momentum, though last week’s rally to fresh record highs occurred on lackluster trading volumes.
While recent buying has seen the relative strength index move into overbought territory, the indicator remains below several prior peaks, giving AMD’s share price further room to explore higher prices.
A measured move higher, which takes the 43% percentage change of the stock’s prior trading range between October and April and applies it from the breakout point, projects a bullish price target of $382, around 10% above last week’s close. Conversely, during pullbacks, investors should watch major support levels for demand around $267 and $187.
ON Semiconductor Fundamental Analysis
ON Semiconductor supplies power and analog semiconductor solutions, with a growing focus on automotive, industrial, and energy infrastructure markets. The chipmaker, which reports earnings before the market opens on Monday, May 4, has repositioned its portfolio in recent years toward higher-margin segments, particularly silicon used in EVs and renewable energy infrastructure. This strategic pivot has supported margin expansion and improved revenue growth as the chipmaker reduces exposure to consumer end markets.
From a valuation standpoint, the company’s stock trades at 34 times forward earnings, double its 5-year average multiple of 17 times, as investors back the chipmakers move into more lucrative markets. However, a slowdown in EV demand, pricing pressure, or delays in capacity expansion could weigh on margins and challenge the company’s ability to meet Wall Street’s growing earnings expectations.
ON Semiconductor Technical Analysis
ON Semiconductor shares broke out from a multi-month rising wedge earlier this month before closing last week at their highest level since August 2023. The relative strength index confirms bullish momentum, though the indicator nears its early 2021 level, a reading that preceded a five-month period on consolidation.
A continuation of the bull run opens the door for a retest of the prominent July 2023 peak around $111 where the stock may find resistance. However, profit taking could see retracements to crucial support levels on the chart located at $87 and $77, areas where investors may look for value buying opportunities.
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