After Advanced Micro Devices Inc. took advantage of the advances of Intel Corp. by 2020, billions of dollars depend on the company continuing on this path as its biggest rival tries to straighten out.
The arrival of Gelsinger is seen as a much-needed infusion of talent to better counter the tastes of AMD CEO Lisa Su, who in the past six years has turned the Santa Clara, California-based chip maker into a formidable rival for Intel after years of being a sad Silicon Valley step-sister. AMD overtook Intel in July, when Intel said it would have to delay its next-generation 7-nanometer chips until 2023 due to manufacturing issues, the same chip architecture that AMD first launched in late 2019 .
In the last twelve months alone, AMD shares have risen about 80%, while Intel shares have fallen about 10%, compared to a 60% increase in the PHLX Semiconductor SOX Index,
AMD shares doubled in 2020, after being the top winner of the S&P 500 index in both 2018 and 2019, bringing AMD’s market capitalization to over $ 100,000 million.
Also: AMD will buy Xilinx for $ 35 billion in stock
BMO Capital Markets analyst Ambrish Srivastava, who recently downgraded AMD to lower performance and lowered its target price to $ 75, said he expects the change of guard at Intel to weigh on AMD stock price.
“We believe that much of the rich valuation is also attributable to the poor execution that Intel has made,” Srivastava said. “Which, in turn, has opened up a ‘blue sky’ scenario in terms of the share that AMD could earn compared to Intel’s even higher driver rating.”
What to expect
Earnings: Of the 34 analysts surveyed by FactSet, AMD is expected to make an average adjusted profit of 47 cents per share, compared to 39 cents per share projected at the beginning of the quarter and 32 cents per share reported in the previous year . Estimize, a software platform that brings together estimates of hedge fund executives, brokers, buying analysts and others, calls for earnings of 50 cents per share.
Income: In November, AMD forecast fourth-quarter sales of $ 2.9 billion to $ 3.1 billion, while average analysts had forecast revenue of $ 2.6 billion at the time. Now, 30 analysts, on average, expect revenue of $ 3.02 billion, up from $ 2.135 billion in the previous year’s quarter. Estimize expects revenue of $ 3.08 million.
Movement of values: In the fourth quarter, AMD shares rose 12%. In comparison, the SOX index rose 25%, the S&P 500 SPX index,
gained 12%, and the composite index Nasdaq COMP
increased by 15%.
What analysts say
Cowen analyst Matthew Ramsay, who has a higher rating on the rating, said he expects AMD’s gains and product roadmaps to remain less volatile compared to Intel’s next year. .
“Over the next two years or so, we see few competitive or fundamental changes from AMD’s perspective,” Ramsay said. “Road maps are set”.
“While the renewed focus and clarity on Intel’s internal priorities and roadmaps may gain some customer loyalty and help slightly reduce the loss of stake on a temporary basis, if Intel is successful in fixing of its 7 nm roadmap, the first products would probably be scaled in 2023, ”Cowen analyst said.
A Securities analyst B Vivek Arya, who has a buy rating on AMD, said that while the company announced new lines of gaming laptops and chips from the data center “Milan” at CES earlier this month , omissions were observed. Arya said investors were concerned about the “lack of details about Milan without revealing new server clients” and “focus on commercial non-portable games where AMD has more problems.” Also at CES, rival Nvidia Corp. NVDA,
announced a new line of gaming laptops.
Benchmark analyst Ruben Roy, who has a retention rating, said he expects tailwinds to elevate both AMD business segments.
“We are updating our revenue and EPS estimates for 2021 to reflect slightly higher computing and graphics segment revenue given the continued strength in the PC market and higher semi-custom revenue given the continued strength of recent console releases. games, ”Roy said.
Analysts, on average, expect $ 1.77 billion in AMD computer and graphics sales and $ 1.23 billion in embedded, semi-custom business sales, the segment that contains data center chips and consoles of games.
Of the 35 analysts covering AMD, 20 have buy or overweight ratings, 12 have retention ratings and three have sell ratings, with an average target price of $ 95.30.