Intel and AMD encountered a softer-than-expected first quarter, with subdued momentum in personal computer (PC) building contrasting with promising server trends that hinted at a potential recovery, according to analysts.
Wedbush analysts noted a deceleration in PC building during the first quarter compared to the previous quarter, partly attributed to economic challenges in China despite hopes for a refresh cycle.
However, towards the end of the quarter, there were positive developments in server trends, likely fueled by increased orders from cloud service providers. This shift presents an optimistic outlook for the second quarter, although potential headwinds from new Chinese regulations affecting telecommunications providers could counterbalance some of this momentum. 
Intel
Ahead of Intel’s earnings report scheduled for Thursday, May 25, the analysts expressed a cautious sentiment, with concerns outweighing positives in the near term. Weak PC demand, market share erosion in enterprise computing to AMD, and reported Chinese restrictions on US silicon usage by telecom companies were highlighted as key challenges.
In the longer term, the analysts emphasized Intel’s need to restore competitiveness in its fabrication operations for sustained success. They maintained a ‘Neutral’ rating on Intel with a price target of $40.
AMD
For AMD, the analysts regarded management commentary on AI sales expectations as crucial, indicating uncertainty about potential adjustments to previous forecasts. They underscored the importance of AMD’s outlook on server compute and AI sales.
While acknowledging challenges in the PC environment during the first quarter, the analysts believed that server builds gained traction later in the period, aligning with their expectations. They expressed cautious optimism about AMD’s results and outlook, particularly noting improved enterprise computing trends from March onwards.
Maintaining an ‘Outperform’ rating and a $200 price target on AMD, the analysts anticipated earnings insights during AMD’s report on Tuesday, April 30. As of Wednesday, AMD shares traded at approximately $156.
