After Advanced Micro Devices Inc. took advantage of the flawed errors of Intel Corp. in 2020, billions of dollars depend on the company to continue on the path while its bigger competitor tries to correct itself.
The arrival of Gelsinger is seen as a much-needed talent infusion to better counter people like AMD’s CEO Lisa Su, who’s made Santa Clara, California’s chipmaker, a huge competitor to Intel for years. of a sad step-sister in Silicon Valley. AMD drove over Intel again in July, when Intel said it would have to postpone its next-generation 7-nanometer chips until 2023 due to manufacturing problems, the same disk architecture that AMD only introduced in late 2019.
Over the past 12 months alone, AMD shares have risen nearly 80%, while Intel shares have fallen almost 10%, compared to a 60% rise in the PHLX Semiconductor Index SOX,
AMD shares doubled in 2020, after being the biggest gains on the S&P 500 index in both 2018 and 2019, pushing AMD’s market capitalization above $ 100 billion.
Also: AMD buys Xilinx for $ 35 billion in stock
Ambrish Srivastava, analyst at BMO Capital Markets, which recently downgraded AMD to underperform and lowered its price target to $ 75, said it expects the change of guard at Intel to weigh AMD’s share price.
“We do think that a large part of the rich valuation can also be attributed to how poorly Intel performed,” Srivastava said. “This in turn created a ‘blue sky’ scenario for how much share AMD could earn compared to Intel, which would make the valuation even higher.”
What to expect
Earnings: Of the 34 analysts surveyed by FactSet, AMD is expected to earn adjusted earnings of 47 cents per share, compared to 39 cents per share expected at the beginning of the quarter and 32 cents per share reported in the previous year is. Estimize, a software platform that estimates hedge fund managers, brokers, sales analysts and others, earns 50 cents a share.
Income: In November, AMD forecast fourth-quarter sales of $ 2.9 billion to $ 3.1 billion, while analysts at the time predicted an average of $ 2.6 billion. Now, an average of 30 analysts expect revenue of $ 3.02 billion, up from the $ 2.13 billion reported in the previous quarter. Tax expects revenue of $ 3.08 billion.
Stock movement: In the fourth quarter, AMD shares rose 12%. In comparison, the SOX index rose by 25%, the S&P 500 index SPX,
12%, and the technically heavy Nasdaq Composite Index COMP,
increased by 15%.
What analysts say
Cowen analyst Matthew Ramsay, with a better performance rating, said he expects AMD’s earnings and product cards to be less volatile compared to Intel’s next year.
“Over the next 2+ years, we see little competitive or fundamental change from AMD’s perspective,” Ramsay said. “Road maps have been drawn up.”
“Although renewed focus and clarity around Intel’s internal priorities and roadmaps could yield some customer loyalty and slow down the share loss in the meantime, Intel would correct its 7nm roadmap, the earliest products would probably scale in 2023 be. Said Cowen’s analyst.
B of security analyst Vivek Arya, who has a sales figure at AMD, said that although the company announced new lines of laptops and “Milan” data center chips at CES earlier this month, there are shortcomings. Arya said investors were concerned about the “lack of details about Milan without announcing new server customers”, and “focus on playing non-commercial notebooks where AMD is most challenged.” Also at CES, rival Nvidia Corp. NVDA,
has announced a new range of games laptops.
Benchmark analyst Ruben Roy, who has a position rating, said he expects the winds from both AMD’s business segments to rise.
“We are updating our 2021 revenue and EPS estimates to reflect a modest higher revenue for computing and graphics segments, given continued strength in the computing market and higher semi-personal revenue given the continued strength of the recent launches of the game console, “said Roy.
Analysts expect an average of $ 1.77 billion in computer and graphics sales from AMD and $ 1.23 billion in enterprise, built-in and semi-personal sales, the segment that includes chips for data centers and game consoles.
Of the 35 analysts covered by AMD, 20 have buy or overweight ratings, 12 have ratings and three have sales ratings, with an average price target of $ 95.30.