Ahead of the earnings season, Susquehanna has revised its price targets for a basket of semiconductor stocks, including Advanced Micro Devices (AMD.US), Intel (INTC.US), and Qualcomm (QCOM.US).
Susquehanna analyst Christopher Rolland wrote in a note to clients: "While we expect most of the upside to remain AI-related, the broader semiconductor upcycle is still unfolding, with lead-times extending by about two weeks for a second consecutive quarter in our SemiSIGnals data. More importantly, pricing actions are becoming increasingly aggressive, and we observed a maximum quarter-over-quarter increase of 12% in 3Q25 (channel checks suggest further price hikes in 4Q26 and into 2027). In the PC market, third-quarter ODM production came in significantly below our prior expectations. As a result, we expect both AMD and Intel's client businesses to come in below seasonal levels in the second half."
The analyst noted: "Given the deterioration in the PC market, both companies are shifting wafers from PC to servers to better serve the emerging agentic demand inflection point. While the magnitude of the server upside ultimately depends on the pace of incremental capacity, the server total addressable market (TAM) continues to expand, driven by market interest in agentic AI products and applications. Beyond x86, we expect ARM-based hyperscale CPUs to continue gaining share, as they increasingly serve as host CPUs for custom AI accelerators (TPUv8/Trainium 3)."
The analyst further added: "Notably, revenue expectations for Arm's AGI CPU have also been raised, with potential upside to approximately $2 billion, compared to an initial target of about $1 billion. Similar to the PC market, we expect the smartphone market to face significant headwinds due to persistent memory supply constraints. On the data center (DC) side, hyperscaler capex plans continue to expand, but LPS-related constraints raise questions about how much of the planned gigawatt (GW)-level capacity will ultimately come online."
Comments