AMD shares dropped nearly 3% in Monday premarket trading, changing hands around $613.64, as rising Treasury yields and surging oil prices pressured technology and semiconductor stocks broadly. Advanced Micro Devices, Inc. (AMD) was among the chipmakers caught between mounting inflation concerns and higher borrowing costs, and the move marked a sharp reversal for a stock that had been one of the market's strongest performers in recent weeks. For a market that had spent weeks rewarding the AI-compute narrative, the session doubled as a test of how that story holds up when rates and energy costs move against it.

Chip Stocks Bear the Brunt of the Selloff

Chip stocks were among the hardest-hit groups in Monday's trading. Intel fell even harder, down more than 6%, while AMD slid over 5% during the session. The Philadelphia Semiconductor Index dropped 3% as chip stocks bore the brunt of the selloff.

Oil added to the pressure. Brent crude climbed more than 3% to $108 a barrel, and West Texas Intermediate gained 3.5% to $95.64, after President Trump rejected ceasefire conditions proposed by Iran.

Treasury yields extended last week's climb as well. The 10-year yield traded above 5.2%, while the 30-year topped 5.5%, both sitting near multiyear highs. Higher oil prices tend to stoke inflation fears, keeping pressure on interest rates. Rising yields hit growth stocks especially hard by increasing the discount rate applied to future earnings.

Why AMD Looked Stretched

Technically, AMD entered the session extended after running up sharply in prior weeks. The stock trades 16.2% above its 20-day moving average and 68.2% above its 200-day moving average. Its relative strength index sits at 73.24, above the 70 threshold that typically signals overbought conditions. That left the shares vulnerable to profit-taking once broader sentiment turned.

The retreat follows an intense rally driven by optimism around Meta's Muse AI technology. AMD and Intel have each gained roughly 30% over the past month on that story. The underlying thesis is that more capable AI agents performing independent tasks will need more computing power, which could expand the market for server CPUs made by AMD, Intel, and Arm-based chipmakers.

Meta has said its own compute needs are "evolving to demand more CPU" as its agentic AI push continues. Michael O'Rourke, chief market strategist at JonesTrading, said the market has read Muse as a boost for an already tight CPU market. That optimism helped AMD cross a $1 trillion market capitalization for the first time last week.

Analysts Raise Price Targets

BofA Securities lifted its AMD price target to $720 from $620 on September 25 while keeping a Buy rating. The firm expects the server CPU market to grow from $61 billion in 2026 to $211 billion by 2030, with $180 billion of that tied to AI. BofA also pointed to the Anthropic-Akamai CPU infrastructure deal as further proof that CPUs matter more as AI systems become more agentic.

Piper Sandler initiated coverage of AMD on September 10 with an Overweight rating and a $600 target. Raymond James upgraded the stock to Strong Buy on August 25, raising its target to $641.

Overall, AMD carries a Buy consensus rating with an average price target of $615.30. At Monday's premarket price, the shares traded almost exactly at that figure, leaving the average target with virtually no cushion above the market price. The stock trades at price-to-earnings multiple near 161, a steep premium — the kind of valuation that leans on earnings projected well into the future, precisely the cash flows that rising discount rates penalize hardest. On Benzinga's Edge Rankings, AMD scores 99.29 on Momentum, 95.62 on Quality, and 95.6 on Growth. Its Value score is just 3.3.

AMD also makes up 8.74% of the iShares Semiconductor ETF, 6.79% of the First Trust Nasdaq Semiconductor ETF, and 6.52% of the Pacer Data and Digital Revolution ETF — weightings large enough that its swings flow directly into the daily results of broad semiconductor funds.

Meta Broadens Muse's Reach

The rally also received a lift from Meta's Connect event, where the company unveiled Charm, a handheld device built for direct Muse access. Zuckerberg said Muse will soon reach Meta's smart glasses lineup as well, and Meta is expanding Muse through retail partners including Walmart, Best Buy, Sephora, Wayfair, Dick's Sporting Goods, and Gap. The announcements reinforced the Muse narrative that has underpinned the recent rally in server CPU makers. What remains unproven is whether Meta's stated appetite for CPU turns into actual server orders — a shift that can only be confirmed through Meta's own future disclosures on compute demand.