Intel (INTC) used to be the dominant CPU force by a long distance but that is no longer the case. Under Lisa Su’s astute leadership, Advanced Micro Devices (AMD) has made huge strides over the past several years; by offering superior products and taking advantage of manufacturing issues and product shortages at Intel, the company has considerably closed the gap between the two chip giants.
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Intel, however, has put a new CEO in charge and has been hatching a comeback plan. The company even made the case in its recent analyst day that they believe the production of TSMC’s 3nm chip is a year late (TSMC has a close working relationship with AMD), which could mean that when Intel launches Granite Rapids on I3 in 2024, AMD will still be on the N5 TSMC node.
“If that’s the case,” says Raymond James’ Chris Caso, “then it would suggest that INTC would have process superiority in 2024, not in 2025, as Intel has previously targeted.” This will also give Intel some “wiggle room” if required.
But is that really the case? AMD, for their part, have stated they have not encountered any of the delays INTC has noted, and that their roadmap is “consistent with TSMC’s roadmap.”
For the record, TSMC has said that by 4Q22, the N3 will be in “volume production,” and by 1Q23 should start generating revenue.
So, what’s Caso’s take on the matter? “Our view is that if Intel executes flawlessly against their process roadmap (which is far from assured) Intel does have the potential to get close to TSMC/AMD’s transistor performance by 2024/25,” the 5-star analyst said. “But even if that were to happen, we still don’t think Intel would be able to maintain their currently dominant market share in client and server.”
What Caso expects will happen over time, is a market which will “move toward a sustained duopoly.” The analyst believes that even flawless execution on Intel’s part is unlikely to stop AMD’s continued market share gains.
To this end, Caso’s rating for AMD stays an Outperform (i.e. Buy) backed by a $160 price target. The implication for investors? Upside potential of 40%. (To watch Caso’s track record, click here)
The Street’s average target comes in just under Caso’s objective; at $154.24, the figure suggests one-year gains of ~35%. Overall, the analyst consensus rates this stock a Moderate Buy, based on 15 Buys vs. 6 Holds. (See AMD stock analysis on TipRanks)
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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.
