TLDR
- AMD shares climbed for nine straight sessions through Friday, posting the longest winning streak in years with a nearly 3% gain
- Intel’s CEO revealed a multi-year turnaround timeline while supply issues prevent the company from fulfilling strong processor demand
- Wall Street analysts expect AMD to capture additional CPU market share in servers as Intel struggles with capacity constraints
- AMD has surged 23% in January as investors bet on the chipmaker benefiting from Intel’s extended recovery period
- Taiwan Semiconductor’s expanded production capacity positions AMD to meet processor demand Intel cannot fulfill
AMD shares rose for a ninth consecutive trading session on Friday. The stock gained nearly 3% in late trading, marking the company’s longest winning streak in several years.
Advanced Micro Devices, Inc., AMD
The rally comes as Intel faces deepening operational challenges. Intel CEO Lip-Bu Tan told investors the company’s recovery will take multiple years during the fourth quarter earnings call.
Intel posted December quarter results that beat earnings expectations. However, the company delivered a weak revenue forecast for the current period.
Intel’s Supply Problems Benefit AMD
Intel executives acknowledged they cannot meet current processor demand. CFO David Zinsner confirmed in an interview with Barron’s that demand remains “really strong” but supply constraints persist.
The company worked through existing inventory but still faces production limitations. Tan said Intel is working to improve manufacturing yields but hasn’t reached competitive industry standards.
Zinsner spoke with several hyperscaler customers who indicated robust demand will continue for years. This creates a clear opportunity for AMD.
Both companies build CPU processors using x86 architecture. These chips power PCs and servers as primary computing components.
When Intel cannot produce enough chips to satisfy demand, AMD captures the remainder of the market. This dynamic is driving investor optimism around AMD’s prospects.
JPMorgan analyst Harlan Sur highlighted server CPUs as a key battleground. He said Intel risks losing additional market share in this segment as it struggles to meet orders.
AI workloads are fueling increased server CPU demand. Intel’s wafer supply constraints prevent it from capitalizing fully on this growth, creating space for AMD to expand.
Manufacturing Partnership Provides Edge
AMD relies on Taiwan Semiconductor Manufacturing Company for chip production. This partnership may prove advantageous as demand accelerates.
TSMC recently increased its capital expenditure forecast to expand manufacturing capacity. The move suggests greater ability to produce processors for AMD going forward.
Sur praised AMD’s server CPU product lineup. He noted the company’s consistent release schedule continues attracting customers while Intel addresses supply and capacity challenges.
AMD stock has jumped 23% during January. Investor confidence is building around the chipmaker’s ability to gain ground against Intel.
The market views Intel’s problems as long-lasting rather than temporary. This gives AMD extended time to penetrate Intel’s traditional strongholds.
Wall Street analysts maintain a Strong Buy rating on AMD stock. The consensus includes 24 Buy ratings and eight Hold ratings from the past three months.
The average analyst price target sits at $284.93. This implies 8.61% upside potential from current price levels.
AMD will report fourth quarter financial results on Tuesday, February 4.
