HSBC remains bullish on large US technology stocks: The outlook for AI in 2026 is fraught with both potential and bottlenecks; the super cycle is just beginning.

HSBC Global Investment Research Department has released the latest research report, maintaining the rating and target price for large technology companies, while emphasizing the challenges and opportunities faced by the artificial intelligence (AI) industry chain (including cloud computing, chips, large language models, and hardware) in 2026. The institution maintains a "buy" rating on NVIDIA Corporation (NVDA.US), Alphabet Inc. Class C (GOOGL.US), Microsoft Corporation (MSFT.US), Amazon.com, Inc. (AMZN.US), Meta (META.US), Oracle Corporation (ORCL.US), and Broadcom Inc. (AVGO.US); a "hold" rating on Apple Inc. (AAPL.US); and a "sell" rating on CoreWeave (CRWV.US). In terms of target prices: NVIDIA Corporation $320, Alphabet Inc. Class C $370, Amazon.com, Inc. $300, Apple Inc. $250, Broadcom Inc. $535, CoreWeave $44, Meta $905, Microsoft Corporation $667, Oracle Corporation $364. A team of analysts led by Nicolas Cote-Colisson said, "In 2025, the AI boom drove the development of many industries, but this trend saw a reversal in October when the growth rate of capital expenditure budgets and financing needs exceeded the revenue growth rate of the AI industry chain's first stage. However, given the pace of AI technology development and its potential to positively boost global GDP of over $110 trillion, we still believe that the AI industry is in the early stages of a super cycle." The analysts highlighted six key trends for 2026: Strong demand leads to continued shortage of cloud computing capacity: Analysts pointed out that in the context of strong demand and backlog of orders, the three Western cloud computing giants - Amazon.com, Inc., Microsoft Corporation, and Alphabet Inc. Class C - have all admitted to facing capacity shortages. Given the long construction cycle of infrastructure projects, analysts predict that this situation will not change in 2026. Industry development faces multiple bottlenecks: Cote-Colisson and his team stated, "Although infrastructure construction is accelerating, power supply and chip capacity remain key factors that will restrict revenue growth expectations in the short term." Analysts added that the focus of industry discussions in 2026 should be on achieving a balance between power supply and demand. Based on the content of Amazon.com, Inc.'s financial earnings conference call, analysts believe that chip supply shortages may become a long-term challenge. Capital expenditures continue to expand: Analysts said that the capital expenditure guidance for the super-scale cloud computing companies has been continuously raised in 2025, and based on the current situation of capacity shortages, this growth trend is expected to continue in 2026. Analysts predict that total global capital expenditure in the cloud computing sector will grow by 44% year-on-year in 2026. ASIC emerging, GPU still has room for development: Cote-Colisson and his team said, "NVIDIA Corporation's GPUs are still the top choice for super-scale cloud computing companies. However, as ASICs improve in performance and demonstrate cost advantages, their market competitiveness is continually strengthening." Analysts predict that the external chip sales volume for ASICs will see significant growth in 2027. Both ASIC and GPU categories have room for growth - analysts point out that ASIC's market share among cloud computing service providers will gradually increase, and the total potential market size for GPUs will continue to expand with the development of enterprise AI and sovereign AI. Reshaping the competitive landscape of the forefront large model market: Analysts predict that high sunk costs will drive market consolidation, ultimately forming an oligopoly dominated by a few leading companies, while retaining some small specialized players. Analysts point out that the intelligence level of open source models is gradually approaching that of top closed source models, and the pricing model dispute for high-end large models in 2026 is likely to become a focus of the industry. AI accelerates integration into the consumer end, hardware growth core DRIVE remains data center infrastructure: Cote-Colisson and his team said, "In 2026, AI technology is expected to further penetrate the smartphone field, and new hardware products such as smart glasses and AI-specific devices may also challenge traditional hardware platforms." Analysts added that in the AI hardware supply chain, data center infrastructure remains the core engine driving growth.