Bernstein raises INTC and AMD price targets but keeps Market-Perform

Overview

This is a Q1 2026 earnings preview report for Intel and AMD. Bernstein raised estimates for both companies, mainly from improving server CPU demand, higher server ASPs, and added Meta AI deal exposure at AMD, but also lowered PC market assumptions and viewed the market’s expectations for the PC/client segment as too high.

Core views

On INTC, the report is more constructive on the server business, expecting 2026 Xeon revenue to grow 36% year over year and assuming double-digit ASP gains that lift gross margins; however, PC demand may face more demand destruction as memory prices rise, and Intel still faces share loss and valuation pressure. On AMD, the report expects EPYC server revenue in 2026 to grow nearly 50% year over year and says Meta exposure is not yet fully reflected in 2027 expectations; however, PC expectations remain high, the pace of Helios ramping, AI megadeal commercial terms, and foundry capacity dependence still need to be validated.

Analysis framework

The report revises assumptions for segment revenue, EPS, gross margins, server ASPs, PC shipments, and AI revenue, and compares them against Bloomberg consensus expectations to assess changes in both companies’ Q1, Q2, full-year 2026, and 2027 earnings forecasts.

Methodology notes

• Earnings forecastSegment estimate revisions

  Revising revenue and EPS by server, PC/client, AI, and margin segments

  Bernstein treats stronger server demand and rising ASPs as positive drivers, while lower PC demand and some higher spending are negative, and compares revenue and EPS deltas versus consensus estimates.

• Valuation methodsTarget price and multiple adjustments

  Higher target price but unchanged rating

  INTC’s target price increase is driven mainly by higher estimates and a higher EV/sales multiple; AMD’s target price increase is driven by higher estimates but a lower multiple. Both firms remain Market-Perform.

• Industry dataPC shipments and seasonal comparison

  IDC/Gartner PC shipment data and Taiwan ODM laptop shipment

  The report uses IDC, Gartner, and Taiwan ODM data to judge that the quarter-over-quarter decline in Q1 PC shipments broadly matches historical seasonality, but year-over-year growth has decelerated, so it remains cautious on PC demand.

Asset mapping & comparison

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

• INTC

  Covered company and Q126 earnings preview subject

  Strengths

  Server CPU demand is improving, with Xeon revenue expected to grow 36% year over year in 2026, and ASP increases potentially lifting gross margins; Ireland fab buybacks reduce NCI pressure.

  Weaknesses

  PC/client demand expectations have been reduced, market share is still slipping, and some positives appear more narrative- and sentiment-driven than clearly reflected in fundamental changes.

  Comparison

  Compared with AMD, Intel also benefits from traditional server CPU demand, but product competitiveness and share performance are weaker; valuation is harder to support further upside after a sharp recent rally.

  Risks

  PC demand may be hit harder by rising memory prices, server capacity and 10/7nm tool add-on uncertainty, 18A yield outcomes, gross margin swings, and a stock that has already risen sharply.

• AMD

  Covered company and Q126 earnings preview subject

  Strengths

  EPYC server revenue is expected to grow nearly 50% year over year in 2026, and Meta AI deals drive a significant 2027 estimate uplift; core server business is relatively more competitive versus Intel.

  Weaknesses

  2026 PC assumptions are below market, much of the server high-growth is already partially in consensus, and it still needs to be proven whether AI megadeals require sharing too much economic upside.

  Comparison

  Compared with Intel, AMD is stronger in server products and share gains, and Meta deals deliver a more material 2027 revenue uplift; however, valuation and AI execution risks still cap rating upgrades.

  Risks

  Potential shortfall in Helios ramp, slower-than-expected OpenAI/Meta AI ramp pace, dependence on fab partners for capacity, continued PC market decline, China MI308 shipment restrictions, and unclear warrant and revenue recognition impacts.

Key data

• INTC Q126 estimateRevenue $12.3B, EPS $0.02Raised from prior $12.2B/$0.00 and slightly above consensus $12.3B/$0.00.
• INTC 2026E estimateRevenue $53.3B, EPS $0.82Revenue below consensus at $54.2B, but EPS above consensus at $0.55.
• INTC 2027E estimateRevenue $57.5B, EPS $1.33Revenue below consensus at $58.4B, but EPS above consensus at $1.04.
• AMD Q126 estimateRevenue $9.9B, EPS $1.27Slightly above prior $9.8B/$1.25 and roughly in line with or slightly above consensus $9.8B/$1.27.
• AMD 2026E estimateRevenue $45.8B, EPS $6.53Below consensus $47.0B/$6.74; AI revenue estimate $14.2B.
• AMD 2027E estimateRevenue $76.7B, EPS $13.23Above consensus at $67.5B/$11.02; AI revenue estimate $43B, primarily driven by Meta deals.
• PC market dataQ1 PC shipments +3%/+4% y/y and about -15%/-13% q/qFrom IDC/Gartner, showing decelerating year-over-year growth and ongoing downside risk to PC demand.

Impact & implications

The report is more constructive on both companies’ short- to medium-term earnings assumptions, but the investment conclusion remains broadly neutral. Stronger server CPU conditions and AI orders may support 2027 expectations, especially at AMD; however, PC weakness, Intel share losses, AMD AI deal execution, margin shifts, and valuation after recent stock appreciation all limit the risk-reward profile.

Risks

• PC demand may face stronger demand destruction as memory prices rise.
• Server CPU upside may be driven more by pricing than by unit-volume, and sustainability still needs verification.
• INTC still faces datacenter CPU share losses, uncertainty around 18A yields, and foundry strategy.
• AMD still has execution risk in Meta/OpenAI AI ramp, Helios ramping, and commercial terms.
• Both companies have seen significant recent stock appreciation, and valuation now has less tolerance for additional fundamental upside.

What to watch

• Guidance in INTC earnings calls on PC shipments, server supply constraints, server pricing, and gross margins.
• Whether INTC adds more 10/7nm server capacity, and updates on 18A yield and foundry customer progress.
• AMD disclosures on EPYC server growth, Helios partners, OpenAI/Meta ramp pace, and AI revenue scale.
• AMD disclosure on China MI308 shipments, warrant accounting treatment for AI deals, and gross margin impact.
• Whether actual 2026 PC shipments come in below market consensus.