Bernstein believes that the recovery in server CPU demand, coupled with data center investment driven by agent AI, is becoming the biggest highlight ahead of Intel and AMD's earnings reports and is expected to partially offset pressures from the client business. However, factors such as slowing PC market demand, rising memory prices, and channel inventory are still likely to drag down the short-term performance of both companies. Earnings guidance and management's outlook on PC demand for the second half of the year will become the market's focus.

The robust recovery in server CPU demand is providing crucial support for Intel and AMD, but the persistent weakness in the PC market poses a non-negligible downside risk. The upcoming quarterly earnings reports from both companies will test the market under this divergent landscape.

According to a preview report released by Bernstein Research on July 21, analyst Stacy A. Rasgon maintains a "Market Perform" rating and a $100 price target for Intel, while keeping an "Outperform" rating and a $600 price target for AMD.

The report points out that the strong momentum in the data center business is expected to partially offset the drag from the client business. However, the full-year forecasts for both companies are below market consensus, with the main divergence centered on PC demand assumptions.

Intel's stock price has surged 163% year-to-date, significantly outperforming the broader market and the Philadelphia Semiconductor Index. AMD has risen 135% over the same period, but both stocks have retreated noticeably from recent highs.

Bernstein believes that the cyclical recovery in server CPU demand, coupled with upward revisions in demand driven by agentic AI, are the core drivers behind the strong performance of both companies' stock prices. Meanwhile, memory price pressures in the PC market represent the most significant current uncertainty.

Intel: Server Narrative Boosts Sentiment, PC and Foundry Remain Variables

Intel is scheduled to report its 2026 second-quarter earnings on Thursday, July 23, at 5:00 PM Eastern Time.

Bernstein forecasts Intel's Q2 revenue at $14.3 billion and non-GAAP EPS at $0.20, slightly below the Bloomberg consensus of $14.4 billion and $0.21. The full-year 2026 forecast is $57.6 billion / $1.07 per share, lower than the consensus of $58.6 billion / $1.11. The 2027 forecast is $63.3 billion / $1.50 per share, also below the consensus of $66.0 billion / $1.57.

The report notes that Intel is currently benefiting from extremely strong server demand—a cyclical recovery from years of pent-up demand post-COVID-19, combined with a sharp upward revision in demand driven by agentic AI. Notably, even though Intel's current server product competitiveness is relatively weak, it has managed to sell inventory products previously considered obsolete, as customers are willing to purchase any available products. Concurrently, market discussions around Intel's foundry business (IFS) have become increasingly active, involving rumors of potential collaborations with Apple and AI packaging business, with some credibility particularly in the packaging area.

However, the outlook for the PC business remains concerning.

Data from IDC and Gartner show that global PC shipments in Q2 2026 declined by 5% and 4% year-over-year, respectively, a significant deceleration from the mid-single-digit growth in Q1. Shipments were roughly flat sequentially (IDC: +0.4%, Gartner: -0.9%), largely in line with pre-pandemic seasonal patterns but weaker than recent years. Taiwanese ODM notebook shipments fell 4% year-over-year in April and 12% in May. Memory market dynamics are expected to further suppress PC demand in the second half of the year.

Bernstein states that the strong performance of the server business and the strengthening of the foundry narrative may provide a hedge, but this could be accompanied by increased capital expenditures, putting pressure on free cash flow and margins. The report notes that analyst sentiment towards Intel is "more optimistic than at any point in some time," but fundamentals (market share trends, PC outlook, etc.) overall still face challenges.

AMD: AI GPU Potential Underestimated, 2027 Expectations May Still Be Low

AMD is scheduled to report its second-quarter earnings on Tuesday, August 4, and will host its 2026 "Advancing AI" conference in San Francisco from July 22 to 23. CEO Dr. Lisa Su will deliver a keynote speech on July 23 at 9:30 AM Pacific Time.

Bernstein forecasts AMD's Q2 revenue at $11.2 billion and non-GAAP EPS at $1.60, slightly below the consensus of $11.3 billion and $1.62. The Q3 forecast is $11.7 billion / $1.65, significantly below the consensus of $12.4 billion / $1.84, primarily due to weaker PC assumptions and the modeling of MI450 GPU volume ramp primarily in Q4. The full-year 2026 forecast is $47.9 billion / $6.98 per share, below the consensus of $50.0 billion / $7.30.

However, Bernstein's forecast for AMD in 2027 is above the market: predicting revenue of $82.2 billion / $14.61 per share, higher than the consensus of $77.7 billion / $13.35. The report believes the Bloomberg consensus forecast for AMD's 2027 AI GPU revenue (approximately $33.5 billion) is significantly low, while Bernstein's own forecast is around $43.0 billion, assuming customers like OpenAI and Meta achieve scaled shipments by then.

The report points out that AMD benefits even more than Intel in the server CPU market because its products possess genuine market competitiveness and are continuously gaining share. Regarding AI GPUs, the timing of the MI450 volume ramp (Q3 or Q4?) is a key variable to watch in the near term. Bernstein believes that with progress in both server CPUs and AI GPUs, AMD could achieve its target of over $20 EPS by 2030 years ahead of schedule—the firm predicts AMD could approach this level as early as 2028.

The upcoming "Advancing AI" conference is seen as a potential catalyst, possibly bringing announcements of new customers, product roadmap details, and total addressable market (TAM) updates. The report also mentions AMD's recent announcement of a partnership with Microsoft and notes that while AMD's stock price has corrected significantly from recent highs, Bernstein sees an investment opportunity at current levels.

PC Market: Memory Pressure Poses Concern for Second Half

The weakness in the PC market is a common thread running through the preview reports for both companies and is the core reason Bernstein's forecasts are below market consensus.

IDC and Gartner data show Q2 PC shipments declined 4% to 5% year-over-year, a marked deceleration from mid-single-digit growth in Q1. Taiwanese ODM notebook shipments fell a combined 8% year-over-year in April-May, with only a 2% sequential rebound in May after a sharp 34% month-over-month drop in April.

Bernstein believes memory market dynamics will further suppress PC shipments in the second half. The status of channel inventory and whether CPU supply channels have normalized will be key points of focus during both companies' earnings calls. For Intel, the PC business weakness is compounded by pressure from declining market share in notebook CPUs. For AMD, PC client-side risk is also a major drag factor for its full-year 2026 forecast being below consensus.