Analyst warns AMD stock may face declines in 2027 after rapid 2026 gains
A market commentary notes that AMD's valuation has surged to historic levels in 2026, and suggests the stock could see profit-taking pressure in 2027 as investors shift toward cheaper peers.
Advanced Micro Devices' shares have risen more than 180% year-to-date in 2026, bringing the company's market value close to $1 trillion. The rapid appreciation has pushed the forward price-to-earnings ratio above 85, making the stock one of the most expensive in the sector, well above peers such as Nvidia, which trades near 26 times forward earnings, and Broadcom at about 32 times.
The analyst attributes the premium to investors seeking an alternative to Nvidia after a period of fatigue with that stock. While AMD secured AI-hardware contracts with hyperscalers in 2025 and delivered chips to companies like OpenAI and Meta Platforms, the commentary argues that much of that growth was already priced in before the 2026 rally.
"I think there could be some declines toward the end of the year as investors take profits and reposition themselves into stocks like Nvidia and Broadcom, which are delivering better growth in the same chip industry at far cheaper valuations," the analyst said.
The piece cautions that AMD would need to sustain significantly higher growth to justify its current valuation, and that a slowdown in earnings could pressure the share price later in 2027.