Investment experts speculate that Intel Corporation (INTC) may be on the path to reclaiming market share from its competitor, Advanced Micro Devices Inc. (AMD). The recent report of Intel's AI data-center and PC sales exceeding Wall Street expectations has fueled this speculation. Analysts are keen on AMD's second-quarter earnings report, which will provide further insights into the situation.
Positive Outlook for Intel
Susquehanna analyst Christopher Rolland, who holds a positive outlook on Intel, expects the company's results to be generally in line with market expectations. However, he highlights growing risks for the second half of the year. Despite this, Rolland suggests that Intel has made progress in reclaiming CPU market share from AMD. Intel's PC sales also show promising growth, with an 18% increase quarter-over-quarter.
Challenges Ahead for Intel
Concerns arise for Intel's data-center business as their weaker-than-anticipated third-quarter data-center guidance indicates potentially slower industry spending on data-center CPUs. Customers may be shifting their focus and allocating more funds towards Nvidia Corporation's graphics processing units (GPU).
Vivek Arya, an analyst at BofA Securities, agrees that Intel's strong PC and data-center performance could negatively impact AMD. While Intel's earnings report offered a positive outlook for Nvidia in the AI arena, it dealt a blow to AMD.
AMD's Position Remains Strong
Although Intel's performance has improved, analyst Jordan Klein from Mizuho desk notes that AMD likely benefited from stronger-than-expected PC sales, similar to Intel. While some may interpret Intel's report as negative for AMD due to increased competition and CPU weaknesses, AMD still holds a resilient position.
As the market continues to shift and new developments unfold, it will be intriguing to witness how these industry giants adapt and compete.
AMD's Position in AI Strengthens Against Intel
According to industry experts, AMD currently holds a stronger position in the AI market compared to Intel with its Genoa processor. This significant advantage positions AMD as less of a loser in the competition. Furthermore, any advancements in the PC sector also work in favor of AMD's overall growth.
MI300 Data-Center CPU and GPU Set to Counter Weakness
Stifel analyst Ruben Roy predicts that even if AMD fails to capitalize on the PC tailwinds, the introduction of their MI300 data-center CPU and GPU will help offset any weaknesses experienced in other segments.
Analyst Expectations for Q2 Earnings
Analysts surveyed by FactSet anticipate second-quarter earnings of 57 cents per share from AMD, with a revenue forecast of $5.32 billion. However, AMD itself has projected a revenue range between $5 billion and $5.6 billion for the same timeframe.
Analyst Ratings and Price Target
Out of the 44 analysts covering AMD, 29 have given it a buy-grade rating, while 15 recommend holding the stock. On average, the analysts have set a price target of $112.26 for AMD, according to FactSet data.
AMD's Strong Performance in the Market
AMD's shares have shown remarkable growth this year, soaring by 74.4%. In comparison, the PHLX Semiconductor Index has grown by 52.1%, the S&P 500 index by 19.3%, and the Nasdaq Composite Index by 36.9%. Conversely, Nvidia's shares have experienced an impressive 220% increase year-to-date.
The Role of AI in Driving Industry Growth
Similar to Nvidia, AMD has become an integral part of the exciting world of artificial intelligence. As AI technology continues to gain mainstream popularity, fueled by platforms like Microsoft Corp.-backed OpenAI's ChatGPT generative AI, both companies stand to benefit.
AI's Impact on Cloud-Service Providers
The rise of AI is expected to drive increased spending from cloud-service providers, often referred to as "hyperscalers." Major players such as Microsoft Azure, Amazon Web Services, Google Cloud Platform, and Oracle Cloud Infrastructure are projected to invest significantly in AI-related solutions in the second half of the year.
Nvidia's Initiatives and Revenue Forecast
Nvidia has made strategic moves to capitalize on the AI revolution. In March, the company's founder and CEO, Jensen Huang, announced a range of products and services aimed at revolutionizing AI development. Moreover, Huang predicts substantial revenue growth from generative AI, emphasizing its increasing significance within the industry.