The second quarter of the US tech stock financial reporting season is about to begin, and Goldman Sachs has released a research report on the prospects of three chip giants, AMD, ARM and Intel.

On Monday local time, Toshiya Hari and other Goldman Sachs analysts released a report maintaining the 'buy' rating for AMD and ARM, and the 'sell' rating for Intel.

Goldman Sachs expects that AMD's Q2 performance and guidance are expected to meet market expectations, and the data center business may achieve double-digit growth. ARM's Q2 performance and guidance both exceed market expectations, and the compound annual growth rate of revenue in the next three years may reach 23%. In contrast, Intel's Q2 performance and guidance may disappoint Wall Street, and its server CPU market share is still being squeezed by peers.

AMD: Strong expansion of data center business.

AMD will announce its second-quarter financial results on July 30th local time.

Wall Street expects AMD to achieve revenue of $5.72 billion in the second quarter, a year-on-year increase of 6.7%, and adjusted earnings per share (EPS) of $0.68, a year-on-year increase of 18.0%. Data center revenue is expected to increase significantly year-on-year, up 108.6% to $2.76 billion, with a month-on-month increase of 17.9%.

Goldman Sachs believes that AMD's second-quarter performance is expected to meet market expectations, and the GPU business may achieve strong expansion. Specifically:

The computer CPU business will grow compared to the previous quarter, and the AIPC and enterprise PC update cycles will partially offset the impact of weak consumer demand.

The month-on-month growth rate of the server CPU business will improve, mainly due to the major cloud service providers starting to recover spending on standard servers, and AMD continuing to gain market share.

Data center GPU business will achieve strong month-on-month growth, with an expected month-on-month increase of double digits.

The embedded business revenue will increase month-on-month, but the growth expectation may fall due to the downturn in demand for industrial, communication infrastructure, and automotive terminal needs.

The game business will continue to be weak, mainly due to inventory adjustments of semi-custom businesses (game console SoC) and weak demand for game GPUs.

Goldman Sachs wrote that AMD management will emphasize its positive attitude towards AI at the earnings conference call, and may raise the full-year data center GPU revenue forecast from the previous $4 billion to $4.5 billion. The second quarter guidance is expected to be basically consistent with market expectations.

Based on the above reasons, Goldman Sachs maintains a 'buy' rating for AMD with a 12-month target price of $175, a 12.3% increase from Monday's closing price.

ARM: Q2 performance and guidance are expected to exceed market expectations.

The day after AMD announced its financial report, the market will usher in ARM's second-quarter financial report.

Wall Street expects ARM to achieve revenue of $0.905 billion in the second quarter, a year-on-year increase of 34.0%, with adjusted EPS of (EPS) being $0.34, a year-on-year increase of 43.2%, and adjusted net profit of $0.358 billion, a year-on-year increase of 45.7%.

Goldman Sachs expects ARM's second-quarter performance and guidance to exceed market expectations. Goldman Sachs' second and third quarter EPS expectations are 0.36 US dollars and 0.29 US dollars, respectively, which are 6% and 7% higher than the market consensus.

The continuous transfer of licensing revenue from the v8 to v9 architecture is expected to bring higher licensing revenue for ARM. In addition, ARM also benefited from the seasonal rebound in the smart phone terminal market, and the expansion of PC and cloud infrastructure businesses.

Goldman Sachs maintains a 'buy' rating for ARM, but sets a 12-month target price of $143, a 12.6% decrease from Monday's closing price. This valuation is based on the expected non-GAAP EPS of $2.20 for Goldman Sachs Q5-Q8 multiplied by 65 times.

Goldman Sachs believes that ARM's revenue is expected to achieve a compound annual growth rate of 23% in the fiscal years 2025-2027, and the non-GAAPEPS compound annual growth rate (excluding stock rewards) will reach 29%, both significantly higher than the industry average.

Intel: Q2 performance and guidance may both fall short of expectations, and server CPU business outlook is not optimistic.

Intel will release its Q2 financial report on August 1st. According to Wall Street's consensus expectations, Intel's Q2 revenue is expected to be $12.96 billion, an increase of only 0.09% YoY, with an adjusted EPS estimate of $0.103, a decrease of 20.8% YoY.

Compared to AMD and ARM, Goldman Sachs has a more pessimistic view of Intel.

Goldman Sachs expects Intel's Q2 revenue to meet market expectations, but Q3 revenue and non-GAAP EPS guidance (excluding stock compensation) will slightly fall below market expectations. Specifically:

Intel's Client Computing Group (CCG) may perform well due to initial AIPC shipments and expected enterprise updates cycle.

Data Center and AI (DCAI) revenue will increase QoQ, driven mainly by the cyclical recovery of server CPU and early growth of Gaudi accelerator revenue.

External foundry revenue will increase, but mostly due to a lower base in the previous period.

Other revenue (including Altera FPGA and Mobileye) will also increase, as these businesses are recovering from a severe cyclical downturn.

Considering Intel still faces fierce competition in the server CPU market, Goldman Sachs maintains its "sell" rating on Intel with a 12-month target price of $29, a 13.1% decrease from Monday's closing price.

Goldman Sachs believes that the popularity of AIPC and smartphones may drive replacement cycles for these devices in the coming years, and the server CPU market is expected to experience cyclical recovery, but Intel's market share will continue to be squeezed by peers.

Editor/Lambor