Why 3 AMD Analysts Are Projecting Continued Market Share Gain Following Blowout Q2

Advanced Micro Devices, Inc. AMD reported Tuesday with strong quarterly results and raised its full-year outlook.

The AMD Analysts: Rosenblatt Securities analyst Hans Mosesmann reiterated a Buy rating on AMD and increased the price target from $135 to $150.

Raymond James analyst Chris Caso reiterated an Outperform rating and $110 price target.

KeyBanc Capital Markets analyst John Vinh maintained a Sector Weight rating.

Rosenblatt Says Q2 Print 'Big And Compelling': AMD's big beat-and-raise in the third quarter is even more compelling given industry supply chain shortages and an increasingly more vulnerable Intel, Inc. INTC, Mosesmann said in a note. 

The revenue growth guidance was hiked from 50% in April to 60%, the analyst said. The company confirmed that all 5nm roadmaps are on track for 2022, he said. 

The gross margin came in at 48%, 100 basis points above expectations, and operating margins are beginning to inflect positively on overall ASP lift and leverage from increasing scale, Mosesmann said. 

The analyst expects chip shortage constraints to reduce going forward at a faster clip, and in turn provide scope for more data center growth.

"Execution, TAM, roadmap, and benign competitive environment are tailwinds for AMD in what we see playing out to be one of the biggest David vs. Goliath dynamics in the history of Silicon Valley," he said. 

Related Link: Intel Launches New Mobile Processors Meant For Gaming Laptops: What You Need to Know

Why RayJay Sees More Market Share Gain Ahead: The growth in the second half is being driven mainly by server, Caso said. Client revenue, the analyst said, will likely remain flat.

AMD is poised to take about 2% server share in each of the third and fourth quarters, he said. 

The positive expectation is not accounted for the launch of the more powerful Genoa server platform, which is expected to have significant incremental performance gains due to the product moving to the Taiwan Semiconductor Manufacturing Company Limited TSM N5 node, Caso said. 

"Since Intel's recent roadmap indicates that AMD will be working with a transistor advantage at least through 2024, we think AMD simply needs to continue doing what they're doing and the market share will come their way," the analyst said. 

Data To Lead The Way In 2H, KeyBanc Says: The data center will likely lead growth in the second-half, Vinh said.

Server revenue grew strongly compared to the previous quarter, thanks to a more than doubling of Milan sales, acceleration of cloud demand and recovery in enterprise demand, the analyst said. 

Data center GPUs more than doubled year-over-year, driven by new deployments of AMD accelerators, he said.

The company expects data center GPUs to grow in the second half as production for accelerators ramps up, Vinh said. 

AMD does not see significant inventory in the channel and expects its PC business to be flat in the second half relative to the first, Vinh said.

"While sounding less optimistic about industry PC growth next year, AMD still expects to grow given share gains," the analyst said. 

The company reiterated that its outlook is supported by company-specific growth drivers in PCs and gaming, Vinh said. 

The valuation is keeping KeyBanc on the sidelines, the analyst said. 

AMD Price Action: At last check, AMD shares were rallying 4.93% to $95.52. 

Related Link: AMD Consolidates Ahead Of Earnings Print