AMD Has A Golden Opportunity To Gain CPU Share From Intel

Advanced Micro Devices, Inc. AMD shares are up another 14.9 percent in 2017 as chip makers have continued to be the stars of Wall Street.

While AMD rival NVIDIA Corporation NVDA may be dominating the gaming GPU market at the moment, AMD has opportunity to steal meaningful CPU share from Intel Corporation INTC, Bank of America analyst Vivek Arya wrote on Wednesday.

AMD launched its latest GPU technology, Polaris, back in June 2016. While Nvidia has targeted the high-end GPU market, AMD has only targeted the low- and mid-range user base up to this point. AMD plans to roll out its Vega product in the second half of 2017, which could pose a threat to Nvidia’s high-end market share.

“While we estimate the mid-range/entry level segment of the market likely accounts for approximately 70-80% of the unit TAM, we believe a larger portion of the value TAM comes from high-end products given their much higher ASP’s,” Arya said.

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As of the end of June, only 1.5 percent of Steam users were using AMD’s latest Polaris cards, suggesting there is plenty of room for share gains as AMD rolls out its higher-end cards.

One of the limiting factors when it comes to gamers using AMD cards is that demand from cryptocurrency miners may be keeping card supply limited, Arya said.

AMD’s latest RX 500 series Polaris cards have yet to appear on Steam’s monthly survey results, but prices have soared 140 percent in the past two months. Bank of America sees this trend as evidence that cryptocurrency miners are snatching up available cards.

“AMD is at the cusp of launching several new products in 2017 which we believe can help expand its operating margins well above Street expectations,” Arya concluded.

Bank of America maintains a Buy rating and $16.50 price target for AMD and a Buy rating and $185 price target for Nvidia.