Bernstein raised target prices for Intel and AMD, but kept both at Market-Perform

Overview

This is a Q1 2026 earnings preview for Intel and AMD. Bernstein focuses on stronger server CPU demand, weaker PC demand, incremental AI orders, gross margin changes, and target price revisions. The report is more constructive on both companies' short-term fundamentals but did not raise ratings because much of the optimism is already reflected in the stock prices and PC, valuation, and execution risks remain prominent.

Core views

For Intel, the report believes the surge in server CPU demand is becoming more tangible, and rising Xeon revenue and ASP could offset weak PC trends while supporting higher gross margins, but the company still faces weakening PC demand, ongoing datacenter share pressure, and valuation headwinds. For AMD, stronger server CPU demand, Meta AI transactions, and higher AI revenue forecasts materially elevate 2027 expectations versus consensus; however, 2026 PC assumptions remain below consensus, and uncertainties remain around AI project ramp, customer warrant arrangements, and supply-capacity readiness.

Analysis framework

The report builds target price and rating views by comparing company model revisions, consensus estimates, PC shipment data, server CPU demand and ASP assumptions, incremental AI revenue, and valuation multiple adjustments. Intel’s key revisions were server revenue, gross margins, and NCI costs; AMD’s key revisions were EPYC server revenue, Meta AI deals, AI revenue forecasts, and operating expense assumptions.

Methodology notes

• Earnings forecastRevenue/EPS estimate revision

  Compares company quarterly and annual revenue and EPS forecasts with prior internal forecasts and consensus expectations.

  The report presents Q126, Q226, 2026, and 2027 revenue/EPS forecasts for Intel and AMD and explains how server, PC, AI, and gross margin assumptions drive forecast changes.

• Industry demandPC shipments and server CPU demand analysis

  Uses IDC, Gartner, and ODM data to gauge PC demand, while using server CPU demand and ASP to assess upside in data centers.

  PC data shows a roughly 13%-15% QoQ decline and roughly 3%-4% YoY growth, but the analysts worry memory price rises may damage subsequent demand; the server side is seen as the main positive driver for both companies.

• Valuation methodsTarget price and multiple adjustment

  Sets target prices based on revised earnings forecasts and valuation multiple adjustments.

  Intel's target price was raised from $36 to $60, mainly due to higher forecasts and a higher EV/Sales multiple; AMD's target price was raised to $265 even though its multiple was reduced versus before.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• INTC

  Core covered security

  Strengths

  Improving server CPU demand, upward revision to Xeon revenue assumptions, potential gross margin expansion from higher ASPs, and reduced NCI pressure from Ireland fab repurchases.

  Weaknesses

  Weakening PC demand, sustained pressure on datacenter share, and some positives skewed toward narrative rather than clear fundamental change.

  Comparison

  Compared with AMD, Intel has in-house manufacturing and controllable capacity potential, but weaker product competitiveness and share performance.

  Risks

  PC demand deterioration, unclear server capacity expansion decisions, 18A yields, and valuation already pricing in optimistic expectations.

• AMD

  Core covered security

  Strengths

  Strong EPYC server growth, Meta AI deals lift 2027 expectations, and server share/product competitiveness stronger than Intel.

  Weaknesses

  PC revenue forecasts may be too high, AI margin and warrant structure are not clearly defined, and dependence on foundry partners' capacity is relatively high.

  Comparison

  Compared with Intel, AMD is stronger in traditional server business and share gains, but it does not own manufacturing, and the economics of large AI orders still need validation.

  Risks

  Helios ramp below expectations, AI customer transactions requiring equity or warrant concessions, AI margins below expectations, and weakening PC demand.

• META

  Incremental AI revenue customer for AMD

  Strengths

  The Meta transaction is included in AMD's 2027 forecast and supports an increase in AI revenue.

  Weaknesses

  Consensus may not have fully reflected this transaction, and timing and scale remain uncertain.

  Comparison

  Together with OpenAI-related opportunities, it is one source of AMD's AI revenue upgrades.

  Risks

  Demand ramp delay, uncertain revenue recognition timing, and warrant or commercial terms that could affect earnings quality.

• ORCL

  AMD/OpenAI ecosystem-related partner

  Strengths

  The report examines whether the Oracle partnership has incremental significance for OpenAI-related sales.

  Weaknesses

  The report does not provide a clear revenue contribution calculation.

  Comparison

  More of a channel or cloud-services-related variable in the AI infrastructure sales path.

  Risks

  Whether sales are incremental and whether they are included in OpenAI business lines still need to be clarified by management.

Key data

• Intel Q126 forecast$12.3B / $0.02Previously $12.2B / $0.00; consensus was about $12.3B / $0.00.
• Intel 2026 forecast$53.3B / $0.82Revenue below consensus at $54.2B, but EPS above consensus at $0.55.
• Intel 2027 forecast$57.5B / $1.33Previously $56.6B / $0.73; consensus is $58.4B / $1.04.
• Intel target price and rating$60, Market-PerformTarget price increased from $36; the report still sees fundamental and valuation pressure.
• AMD Q126 forecast$9.9B / $1.27Previously $9.8B / $1.25; slightly above or near consensus at $9.8B / $1.27.
• AMD 2026 forecast$45.8B / $6.53Below consensus at $47.0B / $6.74; AI revenue forecast around $14.2B.
• AMD 2027 forecast$76.7B / $13.23Materially above consensus at $67.5B / $11.02; AI revenue forecast raised to $43B.
• AMD target price and rating$265, Market-PerformTarget price raised, rating remains neutral.
• Q1 PC shipmentsIDC -15% QoQ, Gartner -13% QoQ; YoY about +3%/+4%The report believes PC demand remains positive year over year, but growth is slowing and may be further affected by memory-price shocks.

Impact & implications

The report is constructive on the semiconductor server CPU and AI chain, but remains cautious on the PC chain and valuation-sensitive assets. Intel's investment implication is that the near-term narrative and server ASPs may continue to support the stock, but fundamental repair is not yet fully complete; AMD's implication is that 2027 AI and server revenues may be undervalued by the market, while order economics and delivery pace require more evidence.

Risks

• PC demand may face demand destruction as memory prices rise.
• Intel's datacenter share loss may continue, and improved server demand may not fully convert into unit growth.
• Intel faces execution risk around 18A yields, capacity additions, and foundry strategy.
• AMD's Helios ramp pace and scaling delivery remain unverified.
• AMD's large AI deals may require warrants or other concession structures, affecting revenue quality and margins.
• Both stocks have risen sharply recently, and valuations are sensitive to positive narrative.

What to watch

• Intel Q126 earnings call on April 23: PC demand, server supply constraints, ASP, gross margin, 18A yields, NCI expenses, and capex.
• AMD Q126 earnings call on May 5: EPYC growth, OpenAI and Meta ramp, Helios progress, AI gross margins, PC channels, and operating expenses.
• Subsequent IDC/Gartner PC shipment data and the impact of memory prices on end demand.
• Whether Intel can offset PC weakness and share losses through server ASP and margin improvement.
• Whether AMD's 2027 AI revenue continues to be revised up and whether consensus catches up with the report's forecast.