AMD processors seen as threat to Intel in the data center
The shares of Advanced Micro Devices (AMD) are climbing after the company announced the launch of its EPYC series data center processors.
Analysts were upbeat on the processors, as research firms Canaccord and Craig-Hallum raised their price targets on AMD and Bank of America Merrill Lynch said the processors could create a positive “turning point” for the company.
Meanwhile, Merrill Lynch downgraded Intel (INTC) to Neutral from Buy, citing increased competition from AMD and Nvidia (NVDA).
AMD TARGETS HIKED
Craig-Hallum analyst Christian #Schwab raised his price target on AMD to $17 from $16, stating that the company’s list of customers and partners, which includes Microsoft (MSFT), Baidu (BIDU) and Dell, is “strong.”
AMD emphasized that #EPYC offers better performance and lower prices than competing chips from Intel, according to Schwab, who said he’s more confident in AMD’s data center business following the product launch. He reiterated a Buy rating on the stock.
Meanwhile, Canaccord’s David Evanson said AMD has “built the foundation to re-emerge as a solid competitor in the enterprise, cloud and storage tiers of the server market. Evanson, who raised his price target on AMD shares to $20 from $17, said the “unique” combination of CPU and GPU technologies embodied in AMD’s processors add value to customers’ deep learning and AI endeavors. He kept a Buy rating on the shares.
TURNING POINT
BofA analyst Vivek Arya says that EPYC could be a “turning point” for the company’s data center business, as the product appears to provide “significantly better price per performance” compared to competing products from Intel. It seems that the product will enable AMD to gain market share in the server market, added Arya, who kept a $16.50 price target and a Buy rating on AMD. Increased competition from AMD in servers and market share gains by Nvidia in accelerators and artificial intelligence could limit Intel’s ability to raise prices in the future as it has done historically, wrote Arya, who downgraded Intel to Neutral from Buy.
Over the last five years, about a third of Intel’s revenue growth from data center companies has been derived from price increases, Arya noted.
Meanwhile, Intel has had to raise its operating spending to cater to large cloud customers and has been forced to increase its investments in memory products, according to the analyst, who trimmed his price target on Intel to $38 from $42.
PRICE ACTION
In Wednesday trading, AMD rose nearly 8% to $13.63 while Intel fell 1.5% to $34.33.
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