Chipmaker Advanced Micro Devices (AMD) is scheduled to announce its results for the first quarter of 2026 tomorrow, May 5. AMD stock has rallied more than 68% year-to-date and 258% over the past year. Ahead of its earnings release, AMD is facing a more cautious view from top HSBC analyst Frank Lee.
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While the stock has rallied strongly over the past year, the top analyst believes much of the upside is already priced in. Lee downgraded AMD to Hold from Buy, pointing to stretched valuation given the company’s current production limits.
For context, Wall Street expects AMD to report EPS (earnings per share) of $1.28, reflecting 33.3% year-over-year growth. Revenue is expected to rise about 33% to $9.9 billion.
Why the Analyst Downgraded AMD Stock
Lee’s main concern is AMD’s high valuation. He noted that AMD has “re-rated sharply,” with its valuation rising from about 19x its estimated 2027 earnings to around 33x. At these levels, he believes most of the positive outlook is already reflected in the stock.
Furthermore, Lee pointed to capacity constraints as a key challenge. Even with strong demand for AI chips, limited supply could cap growth and make it harder for the company to exceed earnings expectations.
Despite the downgrade, Lee slightly raised his price target to $340 from $335, based on a higher earnings multiple. He believes that AMD’s fundamentals remain solid, but the recent rally leaves limited room for further gains in the near term.
Is AMD Stock a Buy, Hold, or Sell?
Currently, Wall Street has a Moderate Buy consensus rating on Advanced Micro Devices stock based on 17 Buys and nine Holds. Following a solid rally, the average AMD stock price target of $308.09 indicates 15% downside risk.
