After Advanced Micro Devices Inc. capitalized on the mistakes of Intel Corp. in 2020, billions of dollars depend on the company’s continuation of the company as its larger rival tries to straighten out.
Gelsinger’s arrival is seen as an infusion of much-needed talent to better counter AMD CEO Lisa Su, who has turned chip maker Santa Clara, California into a formidable rival for the past six years. Intel after years. to be a sad step-sister in Silicon Valley. AMD stepped on Intel in July, when Intel said it would have to delay the next generation of 7-nanometer chips by 2023 due to manufacturing issues, the same chip architecture that AMD first launched at the end of the year. 2019.
In the last 12 months alone, AMD shares have risen nearly 80%, while Intel shares have fallen nearly 10%, compared to a 60% increase in the PHLX Semiconductor Index SOX,
AMD shares doubled in 2020, after being the biggest winner of the S&P 500 index in both 2018 and 2019, pushing AMD’s market capitalization to more than $ 100 billion.
Also: AMD will buy Xilinx for $ 35 billion in stock
BMO Markets Capital analyst Ambrish Srivastava, who recently downgraded AMD to perform poorly and reduced its target price to $ 75, said he expects the change of guard at Intel to weigh on the price of AMD shares.
“We believe that much of the rich valuation is also attributable to how poorly Intel has performed,” Srivastava said. “Which, in turn, opened a ‘blue sky’ scenario for how much AMD could gain from Intel’s even higher rating.”
What to expect
Earnings: Of the 34 analysts surveyed by FactSet, AMD expects to earn, on average, adjusted earnings of 47 cents per share, up from 39 cents per share expected at the beginning of the quarter and 32 cents per share reported in period from a year ago. Estimize, a software platform that collects sources of estimates from hedge fund managers, brokerages, buying analysts and others, is demanding earnings of 50 cents per share.
Income: In November, AMD forecast fourth-quarter sales of $ 2.9 billion to $ 3.1 billion, while analysts had average revenues of $ 2.6 billion at the time. Now, an average of 30 analysts expect revenue of $ 3.02 billion, up from $ 2.13 billion in the quarter last year. Estimates expect revenue of $ 3.08 billion.
Stock movement: In the fourth quarter, AMD shares rose 12%. In comparison, the SOX index increased by 25%, the S&P 500 SPX index,
gained 12% and the Nasdaq composite index COMP
increased by 15%.
What analysts say
Cowen analyst Matthew Ramsay, who is performing better, said he expects AMD’s earnings and product roadmaps to remain less volatile compared to Intel next year.
“In the next 2+ years, we see few competitive or fundamental changes from AMD’s perspective,” Ramsay said. “Road maps are set.”
“While renewed focus and clarity on Intel’s internal priorities and roadmaps could gain some customer loyalty and help slow down the loss of quotas in the meantime, if Intel were to succeed in fix the 7 nm roadmap, the oldest products would probably scale in 2023, ”said analyst Cowen.
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 data center chips “Milano” at CES earlier this month, they omissions were observed. Arya said investors are concerned about “the lack of details about Milan without revealing new server clients” and “focus on games, not commercial notebooks, where AMD is the most challenged.” Also at CES, rival Nvidia Corp. NVDA,
announced a new line of gaming laptops.
Benchmark analyst Ruben Roy, who has a wait rating, said he expects the back winds to lift both business segments of AMD.
“We are updating our EPS revenues and estimates for 2021 to reflect slightly higher computing and graphics revenues, given the continued strength of the computer market and higher semi-custom revenues, given the continued strength of recent console releases games, ”said Roy.
Analysts expect, on average, $ 1.77 billion in sales of computing and graphics from AMD and $ 1.23 billion in sales for enterprise, embedded and semi-custom, the segment containing chips for data centers and consoles of games.
Of the 35 analysts covering AMD, 20 have buy or overweight ratings, 12 have a hold rating and three have a sell rating, with an average target price of $ 95.30.