Chip Stocks Face Pullback Risks After Rally
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 11 hours ago
0mins
Source: CNBC
- Market Performance Review: The three major indexes surged this week, with the S&P 500 recording its largest one-week gain since May, while the information technology sector climbed 8%, indicating a strong market rebound.
- Overbought Signals: Following the significant market gains, CNBC Pro screened for overbought stocks, with AMD's relative strength index (RSI) exceeding 80, as shares jumped over 13% this week, suggesting potential short-term pullback risks.
- Analyst Ratings Optimistic: Despite concerns of a pullback, most analysts polled by FactSet maintain a buy rating for AMD, expecting about 5% more upside, reflecting confidence in its long-term performance.
- Other Stock Performances: In addition to AMD, ON Semiconductor, Intel, and Broadcom also showed strong performances with RSIs in the high 70s, while Synchrony Financial's RSI approached 74, indicating potential for an 8% increase over the next year despite a year-to-date decline of over 6%.
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Analyst Views on AMD
Wall Street analysts forecast AMD stock price to rise
33 Analyst Rating
25 Buy
8 Hold
0 Sell
Strong Buy
Current: 278.260
Low
210.00
Averages
289.13
High
377.00
Current: 278.260
Low
210.00
Averages
289.13
High
377.00
About AMD
Advanced Micro Devices, Inc. is a global semiconductor company. The Company is focused on high-performance computing and artificial intelligence (AI). Its segments include Data Center, Client and Gaming, and Embedded. Data Center segment includes AI accelerators, microprocessors (CPUs) for servers, graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), and Adaptive system-on-Chip (SoC) products for data centers. Client and Gaming segment includes CPUs, APUs, chipsets for desktops and notebooks, discrete GPUs, and semi-custom SoC products and development services. Embedded segment includes embedded CPUs, APUs, FPGAs, system on modules (SOMs), and Adaptive SoC products. It markets and sells its products under the AMD trademark. Its products include AMD EPYC, AMD Ryzen, AMD Ryzen PRO, Virtex UltraScale+, among others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Margin Discrepancy: Broadcom's net profit margin stood at 47.3% in Q4 2025, compared to AMD's 14.7%, highlighting Broadcom's stronger revenue retention capabilities; however, if AMD can improve its margins, it could see significant profit increases.
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- Robust Semiconductor Demand: Taiwan Semiconductor reported a 35% year-over-year revenue growth in Q1, with a gross margin of 66%, indicating that demand driven by high-performance computing and AI exceeds its production capacity, reflecting a positive industry outlook.
- Stable ASML Equipment Sales: ASML sold 79 lithography machines this quarter, generating over $10 billion in revenue, slightly above expectations, demonstrating strong market demand, while maintenance service revenue grew by 17%, indicating increased customer reliance on its equipment.
See More
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- Market Growth Potential: Grandview Research projects a 29% compound annual growth rate for the AI chip industry from 2024 to 2030, indicating significant upside potential that attracts investor interest in related stocks.
- Deepening Partnerships: AMD has partnered with Meta Platforms to deploy 6 gigawatts of AMD GPUs, which is expected to yield “substantial multiyear revenue growth,” showcasing its competitive edge in a high-demand market.
- Financial Performance Comparison: In Q4 of fiscal year 2025, Broadcom achieved a 28% year-over-year revenue growth, while AMD led with a 34% growth, suggesting AMD's stronger performance in revenue growth may attract more investors.
- Margin Discrepancies: Although Broadcom excels in profit margins with a net profit margin of 47.3% in Q4 2025 compared to AMD's 14.7%, AMD has greater room for margin improvement, which could lead to significant profit growth if realized.
See More
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See More
