HSBC Sees Limited Upside for AMD Despite AI Demand

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: May 4, 2026

Key Moments

HSBC downgraded Advanced Micro Devices (AMD) to Hold from Buy while nudging its price target up to $340 from $335.
The bank cut its 2026 AI GPU revenue forecast for AMD to $14.6 billion from $18.5 billion, below the $15.2 billion Wall Street consensus.
Capacity constraints at TSMC’s 3-nanometer node are expected to limit AMD’s ability to meet accelerating demand through at least the first half of 2027.

HSBC Shifts AMD to Hold Ahead of Earnings

HSBC on Monday downgraded Advanced Micro Devices (NASDAQ:AMD) to Hold from Buy, even as it slightly increased its price target on the stock to $340 from $335. The firm noted that, despite robust demand for AMD’s server chips, it sees limited scope for earnings to meaningfully exceed current market expectations.

The change comes just before AMD’s first-quarter earnings release scheduled for Tuesday, and follows a powerful run-up in the share price. According to HSBC, AMD’s stock has climbed 77% since the beginning of April, fueled by optimism around server CPU demand linked to agentic AI workloads.

“However, we do not expect an upside earnings surprise from AMD’s upcoming 1Q26 earnings results, despite strong demand, contrary to Intel’s 1Q26 beat and guidance raise,” HSBC analyst Frank Lee said in a note, arguing that recent gains already reflect much of the positive outlook.

“We expect limited upside opportunities for AMD to significantly surpass market expectations in 2026e in light of the recent share price momentum,” he noted.

Capacity Constraints at TSMC Drive Caution

HSBC’s more cautious stance centers on AMD’s reliance on Taiwan Semiconductor Manufacturing Company (TSMC) for advanced manufacturing, especially at the 3-nanometer process node. That node underpins AMD’s current-generation MI350 GPUs as well as its fifth-generation Epyc Turin server CPUs.

Lee anticipates that tight 3-nanometer supply will persist well into the first half of 2027, effectively limiting how much product AMD can ship even as demand increases.

“We believe it will be difficult for AMD to gain additional capacity allocations beyond what was already assigned by the end of 2025,” Lee wrote.

Revised Revenue Outlook for AI GPUs and Server CPUs

Reflecting these supply constraints and product transition risks, HSBC trimmed its 2026 AI GPU revenue projection for AMD to $14.6 billion from $18.5 billion. The bank cited uncertainty around the ramp of MI450 rack servers and anticipated weakness in the MI350 lineup during the transition period. HSBC’s updated AI GPU estimate is below the Wall Street consensus forecast of $15.2 billion.

On the server CPU side, HSBC now models 2026 revenue of $11.8 billion, which it said is 11% below consensus. The bank expects unit growth in server CPUs to be limited to around 20% for that year.

Metric	HSBC New Estimate	HSBC Prior Estimate	Consensus (where stated)
2026 AI GPU revenue	$14.6 billion	$18.5 billion	$15.2 billion
2026 server CPU revenue	$11.8 billion	Not specified	11% above HSBC’s $11.8 billion

Near-Term Earnings Expectations

For AMD’s imminent earnings release, Lee forecasts first-quarter revenue of $10.1 billion, which sits at the top end of AMD’s own guidance range. He also projects second-quarter revenue of $10.5 billion, aligning with current consensus expectations.

Potential Relief in 2027, but Visibility Still Limited

Looking further out, Lee indicated that conditions could improve in 2027 as TSMC is expected to add more 3-nanometer and 2-nanometer capacity through fabrication facilities in Taiwan, Arizona, and Japan.

AMD’s forthcoming MI450 GPUs and its sixth-generation Epyc Venice server processors are both expected to be produced on TSMC’s 2-nanometer technology. Even so, Lee emphasized that clearer insight into future foundry allocations will be needed before adopting a more positive stance on the stock.

“We believe we will need to see better foundry capacity allocation visibility emerge by late 2026 to have higher confidence in possible upside in 2027,” Lee said.