Well the short answer is Yes... It is supposed to do that.
You are comparing the passives / active of the item but forget that it still gives +50 AD added to base damage. So that 20+1% is just an added bonus to your natural AA. The aoe active is still weaker in comparison because it doesn't spread the base damage just the passive. This is ideal for more tank builds because it allows for more efficient wave clear without sacrificing HP.
The next question is when will they buff Hydra's HP as they briefly mentioned from 250 --> 400.