By Nate Wolf

Advanced Micro Devices was one of the top performers in the S&P 500 last month but the stock's hot run could come to a halt after Tuesday's earnings report, according to analysts at HSBC.

The investment bank downgraded AMD stock to Hold from Buy in a research note Monday, reflecting a lack of upside in the company's central processing unit, or CPU, business. HSBC lifted its price target to $340 from $335, but that doesn't mean much after the stock's 74% rally in April.

Shares of AMD fell 5.3% to $341.38 on Monday. The stock had gained 258% over the last 12 months as of Friday's close of trading.

"We had been bullish on AMD, driven by its consistent share gains in the server CPU market," wrote analyst Frank Lee. However, the stock's recent jump "has significantly raised market expectations over its server CPU growth momentum."

Both AMD and its rival, Intel, have surged due to robust demand for CPUs, which analysts largely agree have become an essential part of agentic artificial intelligence. The problem for AMD may be in meeting that demand.

The company remains dependent on Taiwan Semiconductor Manufacturing's foundry capacity, which will remain constrained through the end of the year. While the lack of supply may boost prices, it caps volume growth, HSBC said.

AMD didn't immediately respond to requests for comment from Barron's.

HSBC expects the company's first-quarter earnings to be in line with expectations when it reports Tuesday after the closing bell. However, the firm cut its full-year estimates for both CPU and AI graphics processing unit, or GPU, revenues.

"We expect that Intel has higher potential for further upside surprises over the next couple of quarters, given its own in-house foundry capacity," Lee wrote. "As such, we could see Intel potentially recovering its server CPU market share relative to AMD's market share on the back of unit growth upside."

The supply challenges likely won't last forever, HSBC said. Overall CPU demand should remain strong in 2027, and Taiwan Semi should increase capacity at its fabs in Taiwan, Japan, and Arizona. The firm will need more clarity on supply to be fully convinced, however.

Write to Nate Wolf at nate.wolf@barrons.com

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May 04, 2026 11:29 ET (15:29 GMT)

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