HSBC Global Investment Research has released a new report, maintaining its ratings and target prices for large technology companies, while specifically highlighting the challenges and opportunities facing the artificial intelligence (AI) industry chain in 2026, encompassing cloud computing, chips, large language models, and hardware. The institution has assigned "Buy" ratings to NVIDIA (NVDA.US), Google (GOOGL.US), Microsoft (MSFT.US), Amazon (AMZN.US), Meta (META.US), Oracle (ORCL.US), and Broadcom (AVGO.US); a "Hold" rating for Apple (AAPL.US); and a "Reduce" rating for CoreWeave (CRWV.US). Target prices are set as follows: NVIDIA $320, Google $370, Amazon $300, Apple $250, Broadcom $535, CoreWeave $44, Meta $905, Microsoft $667, and Oracle $364. The analyst team, led by Nicolas Cote-Colisson, stated, "In 2025, the AI boom propelled the development of many industries; however, this trend saw a shift in October – when the growth rate of capital expenditure budgets and financing needs began to outpace the revenue growth of the AI industry chain's first phase. Yet, considering the rapid pace of AI technological advancement and its potential to deliver a positive productivity boost to the global GDP exceeding $110 trillion, we still believe the AI industry is in the initial stage of a super-cycle." Analysts detailed six key trends for 2026: persistent cloud computing capacity shortages due to robust demand. They noted that against a backdrop of strong demand and order backlogs, the three Western cloud computing giants – Amazon, Microsoft, and Google – have all acknowledged capacity constraints. Given the long development cycles for infrastructure projects, analysts expect this situation will not change in 2026. The industry faces multiple bottlenecks. Cote-Colisson and his team stated, "Although infrastructure construction is accelerating, power supply and chip production capacity remain key factors constraining near-term revenue growth expectations." Analysts added that industry discussions in 2026 should focus on achieving a balance between power supply and demand. Furthermore, based on content from Amazon's earnings calls, they believe chip supply shortages could become a long-term challenge. Capital expenditure continues its expansionary trend. Analysts indicated that capital expenditure guidance from hyperscale cloud providers was repeatedly raised in 2025, and given the current capacity shortages, this growth trend is expected to persist into 2026. They forecast that global cloud computing capital expenditure will increase by 44% year-over-year in 2026. The rise of ASICs, while GPUs still have room for growth. Cote-Colisson's team commented, "NVIDIA GPUs should remain the preferred choice for hyperscale cloud providers. However, as ASICs improve in performance and demonstrate cost advantages, their market competitiveness is strengthening." Analysts anticipate significant growth in external chip sales for ASICs by 2027. Both ASIC and GPU categories have growth potential – they noted that ASICs will gradually gain market share among cloud service providers, while the total addressable market for GPUs will also expand with the development of enterprise AI and sovereign AI. A reshaping of the competitive landscape for frontier large language models. Analysts expect that high sunk costs will drive market consolidation, ultimately leading to an oligopolistic structure dominated by a few major players, alongside some remaining specialized smaller firms. They pointed out that the intelligence level of open-source models is increasingly catching up to top-tier closed-source models, and debates over pricing models for high-end large models in 2026 are likely to become an industry focus. AI accelerates integration into consumer devices, but data center infrastructure remains the core growth driver for hardware. Cote-Colisson and his team stated, "In 2026, AI technology is expected to further penetrate the smartphone sector, while new hardware products like smart glasses and AI-specific devices may also challenge traditional hardware platforms." Analysts added that within the AI hardware supply chain, data center infrastructure remains the core engine driving growth.
Comments