There’s a perfect storm brewing in the CPU market for Advanced Micro Devices, Inc. AMD, according to Stifel, and the firm is raising its expectations for the chipmaker's market share and earnings potential.
AMD management is executing its strategy perfectly and rolling out some impressive products at the same time that market leader Intel Corporation INTC is struggling to keep up with demand and performance, Cassidy said in a Wednesday note. (See his track record here.)
Intel’s 10mn production delays have been widely publicized, and the slow transition from 14nm to 10nm notebook CPUs has left Intel unable to meet market demand, the analyst said. TrendForce estimates that Intel will not be able to meet 10 percent of demand in September, which will provide a golden opportunity for AMD to step in and pick up the slack, he said.
Cassidy estimates that AMD’s unit market share for add-in graphics boards has increased from 30.3 percent in the Q2 of 2017 to 36.1 percent in Q2 of 2018. AMD should release its 7nm GPU for data centers in the second half of 2018 and for desktops in 2019, he said.
“We believe AMD shares deserve a higher P/S valuation due to expanding GM driven by traction across the company's new products, management's solid execution and delayed competitive response from Intel."
AMD shares were down 0.48 percent at $31.06 at the time of publication Thursday. The stock is now up 205.5 percent year-to-date.
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