HSBC Downgrades AMD to Hold After 77% Rally: Is the AI Chip Trade Out of Steam?

Advanced Micro Devices (NASDAQ:AMD) banal received an expert downgrade from HSBC connected Monday, May 4, with the steadfast cutting its standing to Hold from Buy portion nudging the terms people to $340 from $335. The telephone lands 1 time earlier AMD reports its Q1 2026 net connected May 5, and aft a blistering 77% rally since the opening of April.

For semipermanent investors, the terms people raised alongside a standing chopped signals that valuation is present the superior constraint connected AMD stock. The antithetic operation — a higher people paired with a little standing — captures the hostility betwixt AMD's improving fundamentals and a stock terms that has already discounted overmuch of the bully quality heading into the print.

The Analyst's Case

HSBC's thesis centers connected 3 unit points. First, the steadfast sees constricted upside to Q1 estimates and does not expect AMD's upcoming people to present the benignant of upside astonishment Intel (NASDAQ:INTC) produced with its April 23 Q1 2026 bushed and guidance raise. Second, Taiwan Semiconductor (NYSE:TSM) foundry capableness constraints headdress however overmuch 2026 server upside AMD tin capture, adjacent with steadfast demand.

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Third, the valuation statement is direct. After the April AMD banal surge, expectations are elevated, leaving small country for the benignant of beat-and-raise cadence that fueled the move. Simply Wall Street pegs just worth adjacent $300 against a caller ~$360 print, calling shares astir 20% overvalued.

Company Snapshot

AMD designs cardinal processing units (CPUs), graphics processing units (GPUs), and embedded chips, with artificial quality (AI) accelerators present cardinal to the story. Q4 2025 gross deed $10.27 billion, up 34% twelvemonth implicit twelvemonth (YoY), with grounds Data Center gross of $5.38 cardinal (+39%) and escaped currency travel of $2.082 billion.