Is the Raspberry Pi Rally Overdone?

Raspberry Pi (LON: RPI) shares have surged over 51% in the past three months, but the rally may have gone too far. That’s according to HSBC analysts in a note this week.

The bank downgraded the stock from “Buy” to “Reduce,” raising concerns about the near-term prospects for further significant gains.

Raspberry Pi is up significantly since late November, hitting a high of over 726p a share just after Christmas. It currently trades at around 574p after a 6% decline in Monday’s session following the HSBC downgrade.

WELCOME BONUS - Free Share Bundle When You Invest £50! Get up to £500 cashback for investing with IG.

Invest in 15,000+ shares and ETFs. Open an account now, invest at least £50, and you’ll get a free share bundle worth between £40 and £200. T&Cs apply.

5.0

Open Account Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Despite increasing its price target for the stock from 440p to 500p, HSBC highlighted a lack of immediate catalysts to drive the share price meaningfully higher.

The analysts described the recent surge, referred to as a “Santa rally,” as excessive, saying it has been “overdone.” The bank cautioned that current market enthusiasm might be overly optimistic.

“While we like the long-term story for Raspberry Pi, we think the Goldilocks scenario is asking too much,” the analysts noted, suggesting that expectations for continued rapid growth may be unrealistic without clear, short-term drivers.