AMD rally reaches new high as correction risk builds above $600
After a sharp acceleration, AMD is entering a zone where the balance of power could shift quickly and the logic behind the recent move may start to break down. The next few sessions should show whether momentum can hold or whether the market is preparing for a change in direction.
519.58
578.75
The main driver behind AMD’s advance has remained the latest wave of interest in the AI sector. Reuters noted that the strong reception of Meta’s new AI assistant, Muse, helped fuel a broader rally across technology and semiconductor stocks, while AMD became the latest US chipmaker to see its market capitalization rise above $1 trillion.
Momentum weakened somewhat in premarket trading on September 23, however. AMD shares are down around 0.5% after the record-setting move of the previous sessions, pointing to the first signs of moderate profit-taking following the strong rally.
RSI signals overheating but price action needs confirmation
The base-case scenario from the previous analysis has now played out in full. AMD shares reached the $600 target and extended their advance, closing the September 22 session at a new record of $623.77.
Opening short positions while a stock is breaking to an all-time high carries significant risk. For that reason, a short setup would only become worth considering after a clear confirmation signal appears, such as the formation of a doji candle on elevated trading volume.
RSI (14) has moved into overbought territory, increasing the probability of a correction. RSI alone, however, is not sufficient to justify a short position; confirmation from candlestick patterns is still required.
If a reversal signal emerges, the first downside target would be the psychological support level at $600.
A continued move above $650 would invalidate this scenario. In that case, the rally would remain intact, and fresh reversal signals would need to be sought at higher levels.
AMD needs fresh catalysts to extend the record rally
AMD’s fundamental story remains strong for now. The market continues to reprice the company’s prospects amid growing demand for AI computing capacity, while the move above $1 trillion in market capitalization highlights the scale of the shift in investor expectations.
At the same time, the latest leg of the rally is becoming increasingly dependent on the AI momentum already in place rather than on fresh company-specific developments from AMD. Against that backdrop, the absence of a major new catalyst becomes increasingly important after such a rapid rise in the share price.
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