Investing Club: New Wall Street note sees AMD snapping up market share from Intel

Published Wed, Feb 9 202212:00 PM ESTUpdated Wed, Feb 9 202212:06 PM EST

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

A new Wall Street research report out Wednesday suggests that core Club holding Advanced Micro Devices (AMD) will continue to gain share of the data center processor market at the expense of Intel . The note, published by analysts at Jefferies, used data from Mercury Research, a firm that specializes in the PC component market. Bottom line Portfolio analyst Zev Fima said the Investing Club expects AMD's market share gains to continue as the company — under the direction of CEO Lisa Su — executes on its growth plan. It's been paying off, particularly in the data center, which in 2021 saw revenue double year-over-year, according to the company's earnings report last week . AMD's largest revenue segment currently is computing and graphics, which includes sales of processors that power game consoles, PCs and servers. AMD's push to rival Intel in the data-center market also is expected to benefit from the closing of its Xilinx acquisition, which is expected to close in the first quarter of this year . Su touted the wide-ranging benefits of that deal last week in an interview with Jim Cramer during the Club's latest Monthly Meeting livestream. "AMD today is great, and I love the progress that we've made, but AMD three or four years from now, is going to be even larger in terms of our technology capability, our product capability, our customer set, as well as the diversified markets," Su said. Here's what the Club is zeroing on in the Jefferies note as it shows key trends around AMD's business remain in tact. The Club maintains its 1 rating on shares of the semiconductor firm. Jefferies' analysis Here's what Jefferies equity analysts Mark Lipacis and Brian Chen wrote Wednesday for their 2022 outlook as they reiterated their buy rating on AMD: For 2022 data center dual-socket units, we estimate AMD increases by 65% YY vs INTC at 10% YY, implying AMD should gain an additional 600bps YY of unit share. The forecast from Lipacis and Chen builds on what they see as favorable developments for AMD in the fourth quarter. The analysts believe AMD gained share on a unit-volume basis, while revenue share remained flat. Here's what they wrote (emphasis ours): AMD dual-socket server unit share is up 28bps to 15.1%, while rev share was flattish at 14.8%. Mercury estimated that AMD server ASPs declined by 80bps QQ after increasing 13% in Q3. However, with the launch of Genoa, we expect ASPs to increase by 7% by 2H22. We expect AMD share gains to exceed 150bps/qtr for the next 4-to-8 qtrs. ASP is an abbreviation for average selling price. Genoa is the codename for one of AMD's next-generation EPYC processors that are due out this year. Club's position AMD holds a roughly 2.4% weighting in the Charitable Trust, which first bought shares Feb. 18, 2021, at roughly $88.89 apiece. It most recently added 50 shares at approximately $132.36 apiece on Jan. 10, bringing its total holdings to 750 shares. AMD's stock price was higher Wednesday, around $130.80. However, the stock hasn't gotten off to the hottest start in 2022, down nearly 11% year-to-date. AMD has not been the only chip firm to struggle, though. The broader semiconductor cohort has experienced weakness in the new year as investors flock to more cyclical and value-oriented parts of the market, such as energy. For comparison, the VanEck Semiconductor ETF , which trades under the ticker SMH, is down 9.3% year to date. Another positive note In addition to Jefferies' note on AMD, another firm had positive commentary on the chip designer Wednesday. Daiwa Capital Markets upgraded AMD to buy from outperform and raised its price target. (Jim Cramer's Charitable Trust is long AMD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Lisa Su, CEO, AMD

Scott Mlyn | CNBC

A new Wall Street research report out Wednesday suggests that core Club holding Advanced Micro Devices (AMD) will continue to gain share of the data center processor market at the expense of Intel.