AMD Could Triple Market Share on Intel Issues

Advanced Micro Devices Inc. (AMD) continues to win applause from the Street, lifting shares of the chip maker over 211% year-to-date (YTD). 

(For more, see also: AMD a Buy on AI Advantage Over Nvidia: Rosenblatt.)

In a note to clients on Friday, entitled "INTC Supply Constraints = Multi-Fold Benefits to AMD," Jefferies lifted its price target on shares of AMD from $30 to $36, implying a 12.3% upside from Monday morning at $32.06, as reported by CNBC.

Street Baking in AMD 15% Share, Half of Jefferies' Forecast

Analyst Mark Lipacis, who rates the Santa Clara-based semiconductor manufacturer at buy, attributed his upbeat outlook on Intel Corp.'s (INTC) struggle to ramp up production for its next-generation 10-nanometer processor. Intel's weakness could help AMD increase its market share from 10% to 30%, according to Lipacis. 

"Assuming our assessment of AMD's transistor lead in 2019 is correct, and Intel's supply constraints linger through mid-19, we think a market share of 70/30 is not out of the question," wrote the analyst, noting that the Street is underestimating AMD by "baking in 15% share."

Jefferies cited a report from research group Fubon, which indicates that HP Inc. (HPQ) will adopt AMD processors for up to 30% of its consumer PCs in 2019 and that Dell Technologies Inc. will us more AMD chips for its commercial PC line. 

"Fubon's report that Intel will undersupply the PC market between 4Q18 and 2Q19 leaves us with a higher conviction that AMD will report improving revenue, pricing and margins near term, and that is positioned to take share in the high-end PC MPU and server market long term," wrote the bull. 

AMD, the top performing stock in the S&P 500 in 2018, has been the subject of a handful of recent analyst notes highlighting its traction against Intel. Last week, analysts at Stifel lifted their price target on AMD by over 80% to $38, thanks to heightened demand for AMD's new products, management's "solid execution" and a "delayed competitive response from Intel." 

(See also: AMD Can Rise Over 20% on New Products: Stifel.)