Why does Advanced Micro Devices continue to gain market share versus Intel? (NASDAQ:AMD)

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Intel (NASDAQ:INTC) was the leading player in the semiconductor space and held a big lead over rivals such as Advanced Micro Devices (NASDAQ:AMD

But with smartphones, data centers and game consoles booming, Intel (INTC) has lost market share to AMD (AMD) and the trends don’t seem to be stopping anytime soon.

Bank of America analyst Vivek Arya, who has a price target of $160 per share for AMD’s (AMD) stock, and a price target of $47 per share for Intel (INTC), noted that AMD (AMD) is gaining market share in the high end and commercial segments of the notebook market, and it has been able to raise prices. As customers respond to AMD’s (AMD) products, the gap has now narrowed to 5%, compared to between 20% and 30% in the fourth quarter of 2021, despite Intel’s (INTC) Alder Lake product.

Arya said in a research note that strong pricing and execution helped AMD (AMD) increase its share of PC value to 20% in the first quarter of 2022, and its share of units by 22%, “with value share reaching an all-time high.” has achieved. ”

Semiconductors have been in short supply for more than two years due to a number of factors, most notably the Covid-19 pandemic, which has disrupted supply chains around the world.

Chip equipment manufacturers such as ASML (ASML) have been talking about rising demand driving space for years, making the fact that AMD (AMD) has been able to increase its market share even with shortages is all the more impressive.

And it’s not just in the PC space where AMD (AMD) has made significant gains that Intel (INTC) will struggle to overcome in the near term, it’s also the server market that Intel (INTC) has counted on for growth.

In the first quarter, Arya noted that the unit price and average sales price for server chips were “solid” year-over-year, but for the first time in more than a year, there was a sequential decline. While some may be concerned that this is a sign of a “peak in data center demand,” it’s likely the server market will remain healthy as they examine cloud capital expenditures.

AMD (AMD) now has 16.5% of the value and 11.6% of the share of the server market, up 5.7% and 2.7% year-over-year, respectively.

The company isn’t sitting on its laurels either, as next-generation server chips routinely beat Intel’s (INTC) offerings. This is best illustrated by the competition between Milan, the codename of AMD’s EPYC 7003 series of high-performance microprocessors, and Intel’s Ice Lake.

Milan takes more than 30% of the share of the units compared to Intel’s Ice Lake, which Arya called “interesting” given that there was such a difference between the two companies before.

Longer term, given the company’s pricing and continued involvement in so-called hyperscalers, including its recent deal with Meta Platforms (FB), it’s possible AMD (AMD) could get as much as 35% of its value share, which could result in earnings of nearly $8 per share by 2024, compared to current estimates of $6.54 per share.

Arya added that AMD (AMD) has gained unit share of the server market for 12 consecutive quarters and its market share is now the highest in more than 10 years, with seemingly no signs of slowing down.

Assuming that the PC and server markets continue to grow at about 6% at a compound annual growth rate through 2024, it is likely that AMD (AMD) could have a unit and value share of the combined market of 26% and 26%, compared up 19% and 15% in 2021, Arya explained.

Earlier this week, Citi said AMD (AMD) and Intel (INTC) may be impacted by a weakened PC market as shipments of notebook computers fell below estimates for the fourth straight month.

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