Nasdaq AMD

For several years now, Advanced Micro Devices (AMD) has eaten away at Intel’s market dominance in the CPU segment. Intel, however, with a new CEO at the helm, has been devising its comeback program.

Recently, the chip giant announced its new IDM (integrated device manufacturer) 2.0 strategy, which includes the launch of Intel Foundry Services (IFS), a new foundry business, and a $20 billion investment in two new fabs in Arizona. The news was generally well-received and indicated that the struggling semiconductor company was not about to lay down and allow its rivals to grab more market share.

However, Northland analyst Gus Richard calls Intel’s latest move a “strategic faux pas” that plays right into its CPU rival’s hands.

“We do not believe TSMC will relinquish its manufacturing lead to INTC any time soon and process technology leadership drives product leadership and GM higher,” said the 5-star analyst. “INTC expansion into the foundry market will increase AMD as a priority for TSMC and INTC will be persona non grata. For this reason, we expect AMD's market share momentum to continue.”

Richard calls TSMC the “undisputed leader in volume and process technology,” and while Intel has said it will keep on manufacturing its chips in-house, it also intends to outsource chip manufacturing to third-party foundries – TSMC included. But the analyst says its decision to re-enter the foundry market and “maintain leading-edge manufacturing capacity” means that catering to its needs will become “low priority” at TSMC once again.

In contrast, as all AMD’s and Xilinx’ – soon to be part of AMD - leading-edge volume is produced at TSMC, more wins for them means more business for TSMC.

“This will likely result in AMD getting earlier access to technology and better capacity allocation, cementing the Company's x86 process technology leadership for the foreseeable future,” Richard opined.

As such, Richard reiterated an Outperform (i.e. Buy) rating on AMD shares along with a $96 price target. The analyst, therefore, anticipates gains of 24% over the coming months. (To watch Richard’s track record, click here)

Turning now to the rest of the Street, where AMD has plenty of support. The stock has a Moderate Buy consensus rating, based on 16 Buys, 4 Holds and 2 Sells. Going by the $105.55 average price target, shares are expected to be changing hands for ~36% premium a year from now. (See AMD stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

For the past few years, Advanced Micro Devices (AMD) has been a real thorn in Intel’s side, increasingly taking CPU market share away from the historically much bigger rival. In the meantime, the gap has closed, and AMD is now looking to further cement its status in the computer server market.

On Monday, the chip giant launched the 3rd generation EPYC server CPU - code named Milan. Built on TSMC’s 7nm process (same as the second-generation Rome), and featuring AMD's Zen 3 microarchitecture, Milan should display a significantly better instructions per clock (IPC) performance. Cloud, Enterprise and HPC customers should also benefit from Milan’s enhanced security features.

Moreover, across certain HPC, Cloud and Enterprise workloads, Milan has displayed more than double the performance capabilities of 14nm Intel server CPUs.

AMD believes that this year, across all generations of EPYC, the number of cloud instances will likely double, from 200+ 1st/2nd generation instances to more than 400 instances in total.

By the end of 2021, the company also anticipates 100 new OEM server platforms will be using the third gen EPYC.

Following the launch, J.P. Morgan analyst Harlan Sur noted, “AMD continues to deliver meaningful improvements to its server CPU platform and appears poised to expand across customers and workloads.”

The analyst added, “We anticipate AMD benefitting from strong market demand and from new workloads on EPYC 3. Based on 3rd party data, AMD had about 8- 9% share of the x86 server CPU market and we believe AMD will likely be on track to gain 2-4 percentage points of market share this year and likely into next year,”

That said, the analyst believes upside could be “limited,” due to industry-wide supply constraints.

What’s more, Intel is expected to launch its Ice Lake server lineup sometime during the second half of the year, for which Sur anticipates there will “strong demand.” Intel will also have an advantage as it not likely to be supply constrained.

To this end, Sur sticks to a Neutral (i.e. Hold) rating for AMD shares, alongside a $100 price target. You might as well call Sur’s rating a Buy, however, as the upside here comes in at a decent 21%. (To watch Sur’s track record, click here)

Overall, most analysts remain in AMD’s corner; based on 14 Buys vs. 6 holds and 1 Sell, the stock qualifies with a Moderate Buy consensus rating. With an average price target of $104 and a change, investors stand to take home 26% gain, should the target be met over the next 12 months. (See AMD stock analysis on TipRanks)

To find good ideas for tech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.