Analyst Says AMD Will Gain Data Center Share, But Intel Will Continue Its Leadership

On Tuesday, Intel Corporation INTC unveiled its Xeon Scalable Platform at its Purley event.

After performing recent channel checks, Baird analyst Tristan Gerra is convinced Intel could have some data center weakness on the way in Q3. However, in a new research note, Gerra wrote that Intel should be mostly able to fend off competition from Advanced Micro Devices, Inc. AMD.

While Intel management was confident about Purley’s performance lead over rivals on Tuesday, the company provided little clarity on its data center unit expectations for the second half of the year.

Gerra said early shipments added at least $1 billion in revenue for Intel’s Data Center Group in the first half of the year, but much of that revenue may have come at the expense of third-quarter revenue. Intel reportedly shipped 500,000 units in what Gerra said is the company’s most aggressive early shipment push in history.

So far, Baird has gotten positive feedback about AMD’s recently-launched EPYC architecture, suggesting AMD could take a bite out of Intel’s dominant market share.

“AMD is well-positioned for 5%+ share gains medium-term, but Intel’s ecosystem/one-stop shop solutions, along with performance leadership and breadth of product offering, should affirm its continued lead in data center,” Gerra wrote.

Related Link: AMD Has A Golden Opportunity To Gain CPU Share From Intel

Looking ahead, Intel management said it's focusing its data center investment on filling in gaps in its product offerings, including custom application-specific integrated circuits (ASICs).

Gerra expects Data Center Group growth will re-accelerate by the end of the year and Intel will continue to benefit from secular data center growth trends.

Baird maintains an Outperform rating on Intel and a $42 price target for the stock.