AMD Stock Analysts Say Intel’s Market Share Takeover Is Just The Beginning

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Advanced Micro Devices Inc. received praise from most analysts covering the stocks on Wednesday, as the chipmaker posted another beat-and-climb quarter and questioned the notion that demand for chips in data centers is relatively weak. Late on Tuesday, AMD AMD, -0.77% turned around Intel Corp.’s INTC, -0.88% narrative of a data center “digest phase” explaining lower sales by reporting that their Data center chip sales more than doubled. AMD‘s results and improved outlook also beat Wall Street estimates.

Of the 37 analysts covering AMD, 22 have buy ratings on the stock, 12 have retention ratings and three have sell ratings, according to FactSet. Of those, six analysts raised their price targets, raising the average share price target to $ 106.10 from the previous $ 100.50, according to FactSet data. Susquehanna Financial Analyst Christopher Rolland, who has a positive rating and a price target of $ 125, published a note titled “The Guide to Blowout ’21 tells the story of two CPU companies.” “AMD posted incredibly strong results / guidance, driven by widespread growth across nearly all product lines. But the star of the show was the top-of-the-line growth guide for 2021 positively revised from + 37% to 50% YoY, ”he wrote. With AMD reporting revenue of $ 9.67 billion last year, that increase suggests sales of around $ 14.65 billion this year, well above the average analyst estimate of $ 13.46 billion in that year. moment, according to FactSet. That average of analysts rose to $ 14.35 billion on Wednesday. AMD‘s strong earnings and prospects come amid a continuing global microchip shortage as companies that make the silicon wafers used by chip designers work to clear waiting lists that span several months. Read: Semiconductor shortage is here to stay, but it will affect chip companies differently. Cowen analyst Matthew Ramsay, who has an outperformance rating and a $ 120 price target, said the report and outlook show there are no signs of slowing down AMD‘s momentum. “AMD continues to gain material share in large and growing markets with the strength of its PC and server CPU roadmaps and customer partnerships,” said Ramsay. Jefferies analyst Mark Lipacis, who has a buy rating and a $ 110 price target, said he expects AMD‘s loss of market share from Intel only to accelerate. The analyst estimates that AMD has a server market share of 9.1%, up from 7.4% just a quarter ago. “We estimate that AMD server CPU revs increased by 17% QQ compared to INTC server CPUs which decreased by 9% QQ, resulting in a share gain of approximately 170bps from AMD.” Lipacis said. “We continue to expect AMD’s share gains to accelerate from 50-100bps / qtr to 100-300 bps per quarter through 2021 and 2022 as AMD maintains its 1-year compute node leadership.” Read: Intel’s data center customers may be ‘taking in’, but AMD’s buffet is wide open. However, not everyone is convinced of AMD’s advancements in recent years. Citi Research analyst Christopher Danley, who has one of the few sell ratings on AMD and an exceptionally low price target of $ 17 on the stock, doesn’t expect AMD’s loss of market share from Intel to last much longer, given comments from Intel CEO Pat Gelsinger that His company will aggressively defend its market share. “A price war is still to be expected when PCs cool down,” Danley warned. “While AMD gained share and we expect the company to continue to gain share for at least the next two years, we also expect Intel to launch a price war in 2H21 to try to maintain market share.” Over the past 12 months, AMD shares have gained 53%. In comparison, the PHLX Semiconductor Index SOX, -1.29% is up 86%, the S&P 500 SPX Index, + 0.05% is up 46%, and the high-tech Nasdaq Composite Index COMP is up. 63%. More will be revealed this week on how the chip sector is dealing with supply shortages, with Qualcomm Inc. QCOM gaining -1.02% on Wednesday after the bell and KLA Corp. KLAC gaining -0.90% on Thursday.