This week wasn’t good for Advanced Micro Devices Inc.’s price, based on the numbers. It’s still possible for AMD shares to drop 3% this week, even though the company reported good earnings.
If you look at it another way, AMD AMD -0.03% could end up being one of the biggest winners this week. The company’s earnings showed that artificial intelligence was going in a good direction, and Intel Corp.’s earnings showed that AMD would likely continue to gain from Intel’s mistakes.
Because of this new information, AMD shares are up 2.6% on Friday, while the PHLX Semiconductor Index SOX is down 5%.
“After hearing what Intel had to say, we do think we can say one thing: this has to be good for AMD,” Melius Research analyst Ben Reitzes wrote. “Recently, AMD’s share gains have sped up, and we’ve heard that Intel products are having problems.” Once they start, these things are hard to stop.
AMD’s AI PCs and x86 servers are “no joke,” according to Reitzes. He also said that he thought Intel partners like Dell Technologies Inc. DELL -5.66% and HP Inc. HPQ -4.12% might be interested in getting closer to AMD right now.
Reitzes said, “We are humbled by the speed of this semiconductor selloff, but AMD’s hit could be overdone given that [earnings-per-share] power could top $8 if it were to gain 10 more points of share in Intel’s core markets over the next two years.” This would also bring in an extra $5B in income. It is expected that AMD will earn $7.18 per share in 2026, according to FactSet.
The different result was also noticed by Frank Lee of HSBC. AMD’s outlook suggests that the PC and traditional data center markets will get better, but he said that Intel’s “weak [third-quarter] guidance clearly highlights ongoing company execution risks.”
Aside from that, Intel’s prediction makes him think that AMD will continue to lose market share to Intel in the standard data-center business.
“We think the company will keep losing market share to AMD because its manufacturing roadmap isn’t as exciting as that of the leading player,” Hans Mosesmann, an analyst at Rosenblatt Securities, said.
Chris Caso of Wolfe Research said that when Intel’s management talked about the second-quarter results, they talked about overstocking and general business problems. But Caso said, “it’s impossible to say that some share loss isn’t a factor, especially when you look at AMD’s recent results.”
Joseph Moore of Morgan Stanley said that AMD is likely to make more money from data centers this quarter than Intel. Based on what FactSet says, the race is pretty close. AMD is expected to bring in $3.40 billion, and Intel is expected to bring in $3.46 billion.
