AMD Stock Is Climbing. Its Success Is Buoyed by Intel’s Weakness

AMD investors are taking heart from CEO Lisa Su’s confidence that the semiconductor company can continue to gain market share in data centers, pitting its Genoa server chip against Intel’s INTC +0.37% (INTC) Sapphire Rapids processor.

Advanced Micro Devices shares are climbing after it reported a 98% fall in quarterly net profit and was unable to provide full-year guidance. It’s not the normal recipe for success but AMD AMD +6.96% is benefiting from being judged against Intel.

“We are expecting a softer first half and then a stronger second half, but we feel very good about our market share position and opportunity to grow with data center,” Su told analysts on Tuesday.

AMD stock was up 3.3% in premarket trading to $77.61.

That progress in data centers helped underpin AMD’s fourth-quarter earnings which narrowly beat consensus expectations, despite weak personal-computer and gaming demand. That came in contrast to Intel, which is slashing executive pay after missing Street expectations last week.

Analysts at KeyBanc said in a research note that data centers are likely to be AMD’s primary driver of growth this year, as they upgraded their target price on the stock to $95 from $80 and kept an Overweight rating on the stock.

“We see estimates are largely de-risked, with much more favorable risk/reward in the stock, and want to own AMD for the data center growth and share gain story vs. INTC,” KeyBanc’s analysts, led by John Vinh, wrote.

Not all commentators are convinced that AMD can continue to take market share from Intel at the same pace. Oppenheimer OPY –0.70% said in a research note its base case is that AMD will remain “a distant second to Intel” in the core PC and server markets. It also pointed to growing interest in processors from British chip-design specialist Arm—owned by SoftBank Group 9984 +1.79% (JAPAN.9984)—as a reason to stay on the sidelines, keeping a Perform rating on AMD stock.

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