HSBC: CSP Capex Far From Peaking, Leverage Capacity Supports AI Trend Until 2028

According to TechFlow Research, HSBC's August 12 report pointed out that since July 1, the Philadelphia Semiconductor Index has fallen 16% and the S&P 500 has risen 3%, indicating the market's concern over CSP capital expenditure peaking is excessive. Consensus forecasts the capex growth rate of the five major CSPs (Alphabet, Amazon, Microsoft, Meta, Oracle) will decline from 95% in 2026 to 46% in 2027 and 11% in 2028, with free cash flow turning from $34 billion to -$104 billion. However, HSBC scenario analysis shows that if 2027 capital expenditure reaches $1.0 to $1.6 trillion, the Net Debt/Equity ratio will only rise from the current 7% to 8% to 30%, and even if 2028 reaches $1.9 to $2.5 trillion, the Net Debt/Equity ratio will only be 25% to 43%. Under HSBC's aggressive scenario, the overall CSP ROIC will be 19% in 2027 and 17% in 2028, which HSBC believes is still acceptable. The research report judges that TSMC, Intel, and ASML's June quarter capacity expansion guidance is supported by demand. HSBC's top picks are Marvell, Intel, TSMC, and ASML, with target prices of $300, $200, NT$3,400, and €2,149 respectively, all rated Buy. The five major CSPs also all maintain Buy ratings, with target prices of Alphabet $420, Amazon $310, M