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2 Reasons AMD Can Regain Share In The $20 Billion Server Market

2 Reasons AMD Can Regain $20 Billion Server Market NASDAQ:AMD

Advanced Micro Devices, Inc. AMD 7.8% is continuing its run after delivering a second-quarter earnings beat after Tuesday's close. The stock was up more than 8 percent at $15.32 Wednesday morning.

Not only were sales and earnings higher year over year, Q3 sales are projected 6 percent higher than Street consensus, while the Q4 outlook was 8 percent ahead due to strength in new PC (Ryzen), server (EPYC) and gaming products.

Following the release, Bank of America raised its 2017 sales growth estimate to 18 percent year-over-year from 14 percent.

The biggest upside catalyst for growth, according to Bank of America, is AMD’s capturing 5-10 percent of the $20 billion server market as it continues to wage war against long-time competitor Intel Corporation INTC 0.09%.

At its peak, AMD had 26 percent share of the server chip market, but has since plummeted all the way to zero.

“Reclaiming that share will likely take time and be lump, but we like AMD’s design and feature direction,” said Bank of America analyst Vivek Arya.

2 Reasons AMD Can Regain Server Market

  • AMD is making a multi-chip product, which implies lower manufacturing risks, higher yields and possibly 60 percent gross margins.
  • Providing higher core counts, more memory and input/output lanes could be ideally suited for a growing number of public and private cloud workloads, and provides tangible cost-of-ownership benefits vs. Intel’s offerings.

Bank of America maintains a Buy rating on AMD and raised its price objective from $16.50 to $18.

DateFirmActionFromTo
Jul 2017BairdInitiates Coverage OnOutperform
Jul 2017BMO CapitalDowngradesOutperformMarket Perform
Jun 2017Longbow ResearchInitiates Coverage OnNeutral

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