The robust recovery in server CPU demand is providing crucial support for Intel and Advanced Micro Devices, but persistent weakness in the PC market poses a significant downside risk. The upcoming quarterly earnings reports from both companies will be tested by this divergent market landscape.
Analyst Stacy A. Rasgon from Bernstein maintained a 'Market Perform' rating and a $100 price target for Intel, while reiterating an 'Outperform' rating and a $600 price target for Advanced Micro Devices in a July 21st preview report.
The report notes that the strong momentum in the data center business is expected to partially offset the drag from the client segment. However, the full-year forecasts for both companies are below the current market consensus, with the primary divergence centered on assumptions for PC demand.
Intel shares have surged 163% year-to-date, significantly outperforming the broader market and the Philadelphia Semiconductor Index. Advanced Micro Devices shares have risen 135% over the same period, though both have retreated notably from recent highs.
Bernstein identifies the cyclical recovery in server CPU demand, combined with demand upgrades driven by agentic AI, as the core driver behind the strong stock performance. In contrast, pricing pressure in PC memory is cited as the most significant current uncertainty.
Focus on Intel: Server Sentiment Boosted, PC and Foundry Remain Variables
Intel is scheduled to report its Q2 2026 earnings after the market closes on Thursday, July 23rd.
Bernstein forecasts Q2 revenue of $14.3 billion and non-GAAP EPS of $0.20 for Intel, slightly below the Bloomberg consensus of $14.4 billion and $0.21. The full-year 2026 forecast is for $57.6 billion in revenue and $1.07 EPS, below the consensus of $58.6 billion and $1.11. The 2027 forecast of $63.3 billion and $1.50 EPS also trails the consensus of $66.0 billion and $1.57.
The report states that Intel is currently benefiting from exceptionally strong server demand, driven by a cyclical recovery from multi-year post-pandemic backlogs and a sharp upward revision in demand from agentic AI. Notably, even with its current server products considered relatively less competitive, the company has managed to sell previously written-off inventory, as customers are willing to purchase any available product. Meanwhile, market discussion around Intel's foundry business (IFS) has intensified, fueled by rumors of potential Apple collaboration and AI packaging business, with the latter seen as having some credibility.
However, the outlook for the PC business remains concerning.
Data from IDC and Gartner shows global PC shipments declined by approximately 5% and 4% year-over-year in Q2 2026, a marked deceleration from mid-single-digit growth in Q1. Sequentially, shipments were roughly flat, aligning more with pre-pandemic seasonal patterns but weaker than recent trends. Notebook shipments from Taiwanese ODMs fell 4% YoY in April and 12% YoY in May, with memory market dynamics expected to further suppress PC demand in the second half of the year.
Bernstein suggests that the strength in the server business and the enhanced foundry narrative could provide a hedge, though this may come with increased capital expenditures, potentially pressuring free cash flow and margins. The analyst's view on Intel is described as "more optimistic than at any point in some time," but fundamental challenges, including market share trends and the PC outlook, persist.
Advanced Micro Devices Outlook: AI GPU Potential Underestimated, 2027 Expectations May Be Too Low
Advanced Micro Devices is scheduled to report its Q2 earnings on Tuesday, August 4th. The company will host its 2026 "Advancing AI" event in San Francisco from July 22nd to 23rd, with CEO Dr. Lisa Su delivering a keynote on the morning of the 23rd.
Bernstein forecasts Q2 revenue of $11.2 billion and non-GAAP EPS of $1.60 for AMD, slightly below the consensus of $11.3 billion and $1.62. The Q3 forecast of $11.7 billion and $1.65 EPS is significantly below the consensus of $12.4 billion and $1.84, primarily due to weaker PC assumptions and modeling the bulk of MI450 GPU ramp-up in Q4. The full-year 2026 forecast is for $47.9 billion in revenue and $6.98 EPS, below the consensus of $50.0 billion and $7.30.
Conversely, Bernstein's 2027 forecast for AMD is above market consensus: $82.2 billion in revenue and $14.61 EPS, compared to the consensus of $77.7 billion and $13.35. The report argues that the Bloomberg consensus estimate for AMD's 2027 AI GPU revenue, around $33.5 billion, appears too low. Bernstein's own estimate is approximately $43 billion, assuming customers like OpenAI and Meta achieve scaled shipments by then.
The report notes that AMD is benefiting even more than Intel in the server CPU market due to its genuinely competitive products and ongoing market share gains. For AI GPUs, the timing of the MI450 ramp-up is a key near-term variable. Bernstein believes that with progress on both server CPUs and AI GPUs, AMD could achieve its target of over $20 EPS by 2030 several years early, potentially approaching that level by 2028.
The upcoming "Advancing AI" event is seen as a potential catalyst for new customer announcements, product roadmap details, and total addressable market updates. The report also mentions AMD's recently announced partnership with Microsoft and suggests that despite the recent pullback from highs, the current share price presents an investment opportunity.
The PC Market: Memory Pressure Poses a Second-Half Concern
PC market weakness is a common theme in the outlook for both companies and the core reason Bernstein's forecasts are below consensus.
IDC and Gartner data indicates Q2 PC shipments declined 4-5% year-over-year, a clear slowdown from mid-single-digit growth in Q1. Combined Taiwanese ODM notebook shipments for April and May fell 8% YoY, with a 34% sequential drop in April followed by only a modest 2% rebound in May.
Bernstein believes memory market dynamics will further suppress PC shipments in the second half. The state of channel inventory and whether the CPU supply chain has normalized will be key points of focus during the earnings calls. For Intel, PC weakness is compounded by pressure on notebook CPU market share. For AMD, client PC risk is the primary factor dragging its full-year 2026 forecast below consensus.
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