Bank of America has provided an outlook for major semiconductor companies—Advanced Micro Devices Inc (NASDAQ:AMD), Intel Corp (NASDAQ:INTC), Arm Holdings PLC (NASDAQ:ARM), and Qualcomm Inc (NASDAQ:QCOM)—who are due to report earnings in the coming weeks. The financial institution suggests that results will reveal dramatically different performance trajectories depending on each company’s core business strengths.
Market Trends and Investor Focus
While sales of personal computers and smartphones are projected to continue struggling, with 2026 estimates showing declines of more than 10-15% year-over-year, the demand for chips used in artificial intelligence (AI) servers presents a contrasting picture. As organizations increasingly adopt agentic AI and expand their data center infrastructure, demand remains robust.
BofA highlighted several critical questions that investors should observe during this earnings cycle: first, estimating the true size of the server CPU market (which ranges from $120 billion to potentially over $200 billion); second, determining if recent price increases in chips will be sustained; third, assessing the specific computational power required by new AI systems; fourth, evaluating supply chain capabilities against rising demand; and finally, predicting how market share will distribute as diverse chip options enter the marketplace.
The Debate Over CPU Performance
A significant technical discussion is occurring regarding what constitutes optimal performance for an AI-focused Central Processing Unit (CPU). Some industry leaders, including Nvidia, advocate that faster individual processor cores are most valuable because they reduce latency during tool calls. Conversely, AMD argues that the ability to handle multiple tasks concurrently and overall rack efficiency are more important metrics. BofA stated that both viewpoints hold merit, indicating a general trend toward sustained high CPU demand.
Advanced Micro Devices (AMD) Outlook
Bank of America anticipates that AMD will surpass market expectations and increase its financial guidance. This positive outlook is attributed to continued gains in market share, strong cloud computing demand, and clear visibility into supply chains. The firm noted that the company’s upcoming quarterly report is expected to include details regarding the initial shipment of its MI455X “Helios” rack, setting up a significant increase in sales by Quarter 4, potentially reaching $6-7 billion per quarter or more. Furthermore, AMD plans to launch its new Venice server chip around this same time.
Previously, management had estimated the server CPU market value at $120 billion back in May, but BofA believes this figure could climb higher. Consequently, the firm increased its price target for AMD from $550 to $620, citing the company’s upcoming “Advancing AI” event on July 23 as a potential catalyst.
Intel’s Position and Challenges
Despite persistent weakness in PC unit sales—anticipated to drop by 10-15% or more this year—BofA predicts that improved pricing for both server chips and personal computing units, combined with overall AI demand, will help offset the decline. Investors are expected to closely monitor margins within Intel’s Products segment, alongside updates concerning its foundry operations and next-generation 18A server chips.
The report noted a significant shift in market dominance, projecting that Intel’s share of the server market could decline to 24% by the year 2030, down from 41% during the previous year.
Arm Holdings: Dependence on Smartphones and Future Server Potential
For Arm Holdings, a substantial portion of royalty revenue remains tied to smartphones, in a sector where volume declines are expected through 2027. Furthermore, much of the potential revenue from newer chip architectures has already been factored into current valuations. The major opportunity lies in server adoption by large clients like Google and Microsoft, however, this growth is not anticipated until the second half of 2026 or later.
A key factor to watch for Arm is its AI chip business; BofA stated that if demand surpasses supply between 2027 and 2028, it could become a major turning point for the company.
