Goldman Sachs: AMD gains share in Server, while Intel extends its lead in PC

Goldman Sachs analyst Toshiya Hari reiterated a Buy rating and $180.00 price target on AMD (NASDAQ: AMD).

The analyst commented: "

Although AMD lost volume share in the Server CPU market on a sequential basis for the first time in 4 quarters in 4Q23, we continue to expect the company to improve its market position, especially in the enterprise market, throughout our forecast period, supported by the ongoing transition to Genoa (4th-gen EPYC Processor based on AMD's Zen 4 architecture; manufactured on TSMC's 5nm) and Bergamo (4th-gen EPYC Processor based on AMD's Zen 4c architecture, optimized for cloud native workloads) as well as the introduction of Turin (5th-gen EPYC Processor based on AMD's Zen 5 architecture) next year. In addition to share gains in Server CPUs, we expect the company's traction in Data Center GPU as well as the expansion in margins we forecast over the next few years (note we model an increase in non-GAAP gross margins from 50.4% in 2023 to 54.7%/58.0%/58.6% in 2024/25/26, respectively) to drive upside to Street estimates and, ultimately, stock price outperformance."

On Intel: "While we are encouraged by the various strategic actions taken by management over the past 12-18 months (e.g. $3bn in cost savings, implementation of Smart Capital, investment in IFS including partnerships with UMC and Tower Semi) and believe increased clarity on CHIPS Act funding could boost sentiment on the stock in the near-term, we maintain our Sell rating on INTC and continue to await signs of share stabilization in Data Center Compute and/or material progress in its external Foundry strategy. Similar to last year, we expect the large cloud hyperscale customers to prioritize capital spending on accelerated compute (vs. general-purpose compute) in 2024, and for market share within general-purpose compute (or traditional servers) to shift in favor of AMD and Arm-based custom processors (e.g. AWS Graviton). All eyes will be on early customer interest and feedback on Sierra Forest (i.e. Intel's first generation E-core based Xeon server processor tailored to address cloud-native and hyperscale workloads; scheduled to launch in 1H24) and Granite Rapids (i.e. P-core based Xeon server processor optimized for high-core performance-sensitive workloads and general-purpose workloads; scheduled to launch shortly after Sierra Forest) as many investors perceive these products, particularly Granite Rapids, as ones that could help Intel stabilize its market position in Server CPU."

For an analyst ratings summary and ratings history on AMD click here. For more ratings news on AMD click here.

Shares of AMD closed at $167.88 yesterday.

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