Advanced Micro Devices, Inc. AMD has been on a tear in the past couple of years, and a large part of that bullish momentum is tied to the company’s market share gains from competitors like Intel Corporation INTC.
On Tuesday, Lynx Equity Partners analyst KC Rajkumar said AMD is on the brink of stealing a major client away from Intel.
Google Up For Grabs?
Rajkumar said Lynx has heard rumors that Alphabet Inc GOOG GOOGL subsidiary Google is dissatisfied with Intel’s server platform.
“While the issues of Meltdown and Spectre, first discovered by Google researchers, have been addressed by INTC in terms of bug-fix, we think there is a new issue that is causing concern,” Rajkumar wrote.
He has also found evidence of a shift in Google’s tech.
“Furthermore, our field research into the hardware supply-chain shows that Google-specific server boards are being built with AMD’s Epyc server CPU, a first,” Rajkumar said.
If Google’s data center business defects from Intel and partners instead with AMD, Rajkumar said it would be a huge win for AMD and a devastating loss for Intel.
Window Of Opportunity Wide Open
AMD has already been gaining market share from Intel for several quarters thanks to more advanced CPU/GPU design features and superior process technology relative to Intel. Rajkumar said the market is already well aware of the share gains, but the duration and magnitude of those gains will be a major driver for AMD and Intel shares in coming quarters.
Rajkumar said he was optimistic Intel might show an improved timeline for its 10nm roll-out during its earnings call earlier this month, but investors were once again disappointed. For now, at least, the window of opportunity for AMD appears to be wide open.
Rajkumar cut his price target for Intel from $65 to $45. He has a $40 price target for AMD.
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