KeyBanc Upgrades AMD & Intel to Overweight as Cloud Demand and AI Accelerators Surge

KeyBanc’s recent upgrade of AMD and Intel reflects a confluence of demand-side tailwinds, supply constraints, and competitive positioning. Below are the detailed implications for both companies, for investors, and open risks to monitor.

1. What’s behind the upgrades

For AMD, KeyBanc cites “outsized hyperscaler demand” — demand from large cloud providers (Amazon, Google, Meta, etc.) that is currently absorbing nearly all of the company’s server CPU output for 2026. This tightness in supply is enabling AMD to consider a 10–15% increase in average selling prices (ASPs) in Q1 2026. Additionally, demand for its AI accelerators (MI355 early in 1H and MI455 later in 2H) is expected to lift AI-related revenues to $14B–$15B in 2026.

Intel’s upgrade leans more on stabilizing momentum. Growth in its new server platforms — Granite Rapids, Emerald Rapids, Sapphire Rapids — is increasingly evident among major cloud providers. While absolute margins remain modest, the increased deployment suggests Intel may be on a more sustainable footing in data centers, helping restore investor confidence.

2. Strategic implications for AMD

AMD’s forecasted server CPU sales being nearly sold out for 2026 suggests a strong demand pull that could compress lead times and shift power toward supply-constrained players. If ASP increases are realized, revenue growth may outpace volume gains, expanding margins. However, execution matters — Helios (AMD’s rack-scale system) must live up to expectations in terms of delivery and ecosystem support. Success here would bolster AMD’s competitive edge against Nvidia in cost-sensitive AI segments.

3. Strategic implications for Intel

Intel appears to be regaining ground in server CPU deployments, especially via newer platforms. Consistent growth in units deployed month-over-month suggests that its long-held stagnation in data center adoption may be reversing. This could validate Intel’s R&D and supply chain investments, especially if they can narrow the performance or power efficiency gap with AMD and Nvidia. However, Intel’s gain is still constrained: analysts expect upside, but current consensus is more cautious.

4. Risks & open questions

• Can AMD actually increase ASPs by 10–15% without triggering pushback or channel disruption? Also, are there yield issues or supply constraints that could derail ramping MI455 or fulfill Helios orders?
• Intel’s gains remain fragile. For example, its deployments may be growing, but margin pressure persists, especially versus AMD’s newer architectures. Will Intel’s product cycle and manufacturing roadmap sustain this momentum?
• Macroeconomic and geopolitical risks: memory supply shortages are cited, which benefit suppliers but pressure PC and smartphone segments; also concerns over export restrictions (notably to China) could impact both players.
• Competition from Nvidia: for AI acceleration, especially in high-end, AWS/Nvidia contracts, customer lock-in, and software ecosystems remain a formidable barrier for both AMD and Intel.