For years, Intel Corp.’s pain has been Advanced Micro Devices Inc. gain, as AMD has gained market share in central processing units amid Intel’s missteps.
Now, however, Intel
INTC,
seems to be getting its act together more, and that might mean that the company is clawing back share at AMD’s
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expense.
Investors will get more information when AMD reports second-quarter earnings after the close of markets Tuesday. Last week, Intel Corp.’s AI data-center and PC sales topped Wall Street expectations.
“In short, we expect generally [in-line-with-expectations] results but see increasing risks to the second half,” wrote Susquehanna analyst Christopher Rolland, who has a positive rating on the stock and a $145 price target. The analyst said he believes Intel may have taken some CPU market share back from AMD given Intel’s PC sales were up 18% quarter-over-quarter.
Plus, the company could face challenges in its data-center business. Rolland said that Intel’s weaker-than-expected third-quarter data-center guidance may suggest slower industry spending on data-center CPUs as customers allocate more dollars toward the graphics processing units sold by Nvidia Corp.
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“Putting it all together, we note risks to the [second half] guide as the bar was set high, and checks suggest something less than perfection,” Rolland said.
BofA Securities analyst Vivek Arya took a similar view, writing that while Intel earnings offered a “positive read-across” for Nvidia in the AI arena, Intel’s strong PC and data-center numbers were a negative for AMD.
Read: Nvidia gets more good news from Big Tech, even as AI spending ‘may not lift all boats’
Still, Mizuho desk analyst Jordan Klein said AMD likely benefited from stronger-than-expected PC sales like Intel.
“You could spin a few negatives from Intel’s call for AMD if you wanted,” Klein wrote Friday. “They gained more share in PC in Q2, and they talked up CPU weakness due to shift in cloud spend to GPU and gen AI.”
“But AMD has better CPU position in AI with Genoa right now vs Intel, so less a loser,” Klein said. “And any improvement in PC also helps AMD.”
Even if AMD doesn’t catch those PC tailwinds, Stifel analyst Ruben Roy said Friday he expects AMD’s MI300 data-center CPU and GPU to offset weakness elsewhere.
Analysts surveyed by FactSet, on average, expected second-quarter earnings of 57 cents a share from AMD on revenue of $5.32 billion. The company gave a forecast for $5 billion to $5.6 billion in revenue.
Of the 44 analysts who cover AMD, 29 had buy-grade ratings and 15 had hold ratings, with an average price target of $112.26, according to FactSet data.
AMD’s shares are up 74.4% to date in 2023, while the PHLX Semiconductor Index
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is up 52.1%, the S&P 500 index
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is up 19.3%, and the tech-heavy Nasdaq Composite Index
COMP,
has risen 36.9%. Nvidia shares, on the other hand, have soared 220% this calendar year.
Like Nvidia, AMD has been swept up in the hype of artificial-intelligence technology going mainstream amid the popularity of Microsoft Corp.
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–backed OpenAI’s ChatGPT generative AI.
AI is also expected to fuel spending from cloud-service providers, or “hyperscalers” — such as Microsoft’s Azure, Amazon.com Inc.’s
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Amazon Web Services, Alphabet Inc.’s
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Google Cloud Platform and Oracle Corp.’s
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Cloud Infrastructure — in the second half of the year.
Nvidia has fed into that, with Jensen Huang, its founder and chief executive, announcing a slew of products and services targeted at expanding AI development in March, before AMD’s AI product launch in June.
Nvidia’s Huang also forecast that the “tiny, tiny, tiny” amount of revenue the company currently receives from generative AI will become “quite large” over the next 12 months.
This story originally appeared on Marketwatch
