AMD (AMD) Winning 'Zero-Sum Game' Versus Intel (INTC); Could Win Over Google Data Centers - Lynx Equity Strategies

July 30, 2019 7:51 AM EDT
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(Updated - July 30, 2019 8:31 AM EDT)

(updated to add the Google comments)

Lynx Equity Strategies analysts KC Rajkumar and Jahanara Nissar believe it's a "zero-sum game" between AMD (NYSE: AMD) and Intel (NASDAQ: INTC), and AMD is winning. They see AMD heading higher and INTC heading lower.

To wit: "While an inline CY19 outlook at AMD may appear disappointing to some, we expect AMD management to maintain guidance and keep eyes trained on a multi-year share gain story at the expense of its traditional rival. The architectural advantages AMD designs in servers and PCs is magnified by the manufacturing muscle TSM brings to the table. TSM’s recent increase in 7nm capex is a clear positive for AMD, even as INTC’s production ramp of 10nm server cpu is at least a year away. We see AMD headed up for the $40 level by year end and INTC headed down for the $45 level."

Further, the analysts picked up rumblings of dissatisfaction at Google with Intel's server platform, which could be a boon for AMD.

"Except for the well-advertised Stadia gaming platform at Google based on AMD’s 7nm GPU, Google so far has not been a big supporter of AMD at its mainstream servers. However, that may be about to change. We are picking up rumblings of dissatisfaction at GOOG with INTC’s server platform. While the issues of Meltdown and Spectre, first discovered by Google researchers, have been addressed by INTC in terms of bug-fix, we think there is a new issue that is causing concern. Furthermore, our field research into the hardware supply-chain shows that Google-specific server boards are being built with AMD’s Epyc server CPU, a first. A design win at Google data center could be a key winner for AMD and a substantial loss at INTC."

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