Bernstein raises Intel and AMD target prices but maintains Market-Perform ratings

Overview

This is a Bernstein preview report on Q1 2026 results for Intel and AMD. The report mainly updates assumptions for both companies on server CPUs, PC client business, gross margin, AI revenue, and 2026-2027 earnings forecasts. The overall conclusion is that server and AI-related trends are improving, but weakening PC demand, Intel fundamentals and valuation pressure, and execution uncertainty around AMD Helios and large AI contracts lead the analyst to keep Market-Perform ratings.

Core views

The core views include: first, Intel benefits from rising server CPU demand and higher Xeon ASP, with gross margin estimates being raised, but PC business and market-share pressure remain significant; second, AMD benefits from EPYC server growth and the Meta AI partnership, with 2027 forecasts revised up materially, but market expectations for AI and servers are already relatively high; third, PC demand is affected by rising memory prices and demand destruction, and the report believes market expectations for PC-related revenues remain overly optimistic; fourth, much of the positive sentiment has already been reflected in both stocks, so the target price upgrades did not result in rating upgrades.

Analysis framework

The report uses an earnings preview and model-adjustment approach, combining segment-level assumptions, IDC/Gartner PC shipment data, Taiwan ODM laptop shipments, server CPU demand, gross margin, market consensus, and target-price valuation in a comparative framework. The focus is not on a single-quarter revenue number, but whether upside in servers can offset the downturn in PCs and whether gross margin improvement can translate into EPS upgrades.

Methodology notes

• Earnings forecastSegment revenue and EPS model

  Adjusts 2026-2027 revenue and EPS forecasts for server, PC, AI revenue, and gross margin assumptions.

  The report separately updates INTC and AMD quarterly and annual revenue, gross margin, operating margin, and EPS, and compares them with prior forecasts and Bloomberg consensus estimates.

• Industry data trackingPC shipment and ODM tracking

  Uses IDC, Gartner, and Taiwan ODM laptop shipment data to assess PC demand.

  Q1 PC shipments were up slightly year-over-year but down about 13%-15% sequentially, while Taiwan ODM laptop shipments in January-February were down about 25% versus November-December, supporting the report's reduction in PC assumptions.

• Valuation and ratingTarget-price and Market-Perform rating framework

  Raises target prices in line with upgraded earnings forecasts, while ratings remain constrained by valuation and risk.

  INTC target price was raised to $60 and AMD target price to $265, but both remain Market-Perform, reflecting a balance between positives and risks.

Asset mapping & comparison

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

• INTEL CORP (US.INTC)

  Core coverage name

  Strengths

  Server CPU demand is strengthening, Xeon ASP is rising, gross margin forecasts were raised, and repurchases at the Ireland fab reduce NCI pressure.

  Weaknesses

  Weak PC business, client market-share losses, uneven fundamental improvement, and valuation pressure after a large recent stock rise.

  Comparison

  Compared with AMD, Intel’s server upside appears to come more from Xeon demand and ASP improvement, while AI-revenue sensitivity and growth narrative are weaker.

  Risks

  Further deterioration in PC demand, mismatch between server capacity and demand for legacy-node products, gross margin upside underdelivering, and valuation compression.

• ADVANCED MICRO DEVICES INC (US.AMD)

  Core coverage name

  Strengths

  Strong EPYC server demand, Meta AI partnership supports the 2027 forecast, AI revenue forecasts were raised significantly, and stock valuation pressure appears to have eased versus before.

  Weaknesses

  Market expectations for AI and servers are already high, PC business remains below market assumption, and commercial terms of major AI contracts still need to be proven.

  Comparison

  Compared with Intel, AMD has stronger AI and server growth optionality, but its 2027 forecast is more dependent on the Meta partnership and Helios ramp execution.

  Risks

  Helios ramp delivering below expectations, AI megaproject cooperation diluting shareholder upside, 2026 drag from PC business, and server shipment growth already being largely priced in by the market.

Key data

• INTC Q1 2026 forecastRevenue $12.3B; EPS $0.02Raised from prior $12.2B/$0.00, close to revenue consensus but slightly above consensus EPS.
• INTC full-year 2026 forecastRevenue $53.3B; EPS $0.82Revenue below consensus estimate of $54.2B, but EPS above consensus estimate of $0.55.
• INTC 2027 forecastRevenue $57.5B; EPS $1.33Revenue below consensus estimate of $58.4B, but EPS above consensus estimate of $1.04.
• AMD Q1 2026 forecastRevenue $9.9B; EPS $1.27Raised from prior $9.8B/$1.25, roughly in line with or slightly above consensus.
• AMD full-year 2026 forecastRevenue $45.8B; EPS $6.48; AI revenue $14.2BStill below consensus of $47.0B/$6.74, but AI revenue is up about $1B versus prior forecast.
• AMD 2027 forecastRevenue $76.7B; EPS $13.23; AI revenue $43BSignificantly above consensus estimate of $67.5B/$11.02, mainly driven by Meta partnership and upward revisions to server business.
• PC market assumptionThe 2026 PC market is close to a year-over-year decline of 10%The report says memory-price-driven demand destruction could lead to double-digit declines in the second half PC market.
• Rating and target priceINTC: Market-Perform, $60; AMD: Market-Perform, $265Target prices were raised, but ratings were not upgraded.

Impact & implications

For investors, the report indicates that semiconductors’ server and AI themes remain supported, but the PC cycle downturn and valuation being pre-reflected in stocks should not be ignored. Intel’s near-term EPS may be supported by gross margin and server ASP improvement, but after a sharp recent rally, both fundamentals and valuation have become more challenging. AMD’s medium- and long-term AI revenue and Meta partnership improve the 2027 upside, but 2026 PC pressure and server ramp execution still need validation.

Risks

• PC demand is below expectations due to higher memory prices and demand destruction.
• Intel server ASP and gross margin improvement fail to materialize fully.
• AMD Meta AI partnership and Helios project ramp underperform versus expectations.
• Both stocks have already reflected significant server and AI positives, leaving limited valuation safety margin.
• Market consensus may still be too high on PC business, implying further downward revision risk.

What to watch

• Intel’s commentary on Xeon demand, ASP, gross margin, and PC client outlook in the Q1 2026 earnings call on April 23.
• AMD’s updates on Meta AI partnership, AI revenue, and EPYC server demand in the Q1 2026 earnings call on May 5.
• Subsequent IDC and Gartner PC shipment data, as well as Taiwan ODM laptop shipment trends for March and April.
• The impact of memory prices on complete-system PC demand and second-half shipments.
• Changes in NCI expense after the Ireland fab buyback by Intel and the company’s server-capacity deployment plans.