Advanced Micro Devices (AMD) rolled out its much-anticipated Navi GPU lineup at the E3 show on Monday. In addition, the company also rolled out a new high-end desktop CPU part.
From the AMD E3 press release, here is a list of products that were rolled out:
Of the GPU products, the Radeon RX 5700 XT 50th anniversary edition is a specialty SKU that will be sold directly by AMD but not through its partners or traditional retail channels. The other two GPU products fill out the mid-range gaming GPU lineup as can be seen from the image below from AnandTech.
Until now, the two new products, outlined by blue above, were the key missing pieces from AMD GPU lineup. To date, AMD’s other GPU product family, based on its high-end Vega technology, was too expensive to fill these price points. For several years now, lacking competitive products, AMD has let Nvidia (NVDA) rule these price points nearly uncontested. Navi now solves the problem.
It also helps AMD hugely that Navi die is small compared to Vega (see image below from AMD presentation – all images in this article from AMD presentation unless specified otherwise). The smaller die size, coupled with not needing high priced HBM memory, makes Navi based GPUs a very cost effective product line for AMD. Thanks to the small die size, AMD, if there is a strategic need, can compete very aggressively with Nvidia on price.
Thanks to the improved GPU product line, we expect that AMD will likely take 10% or more market share from Nvidia during the second half of the year. We see this as a major headwind for Nvidia during H2.
On the CPU front, the 16-core Ryzen 9 announcement was a surprise coming so soon after the 7nm CPU product line unveiled just a few weeks back at Computex. With availability slated for September (see image below), this product will likely be widely available during the peak Christmas selling season.
In addition to the raw performance the new 7nm CPU offers, AMD has built its desktop platform for high bandwidth IO applications (see image below). We see this IO advantage as a major differentiator for AMD until Intel (INTC) delivers its next generation product line sometime in 2020 or 2021.
As such, AMD is now decisively pulling away from Intel and we have a hard time seeing Intel being competitive until possibly 2021. AMD has historically never enjoyed such a large window of opportunity and should be able to take significant market share from Intel until well into 2021.
AMD, with its new GPU lineup, has plugged a key product hole and has become extremely competitive with Nvidia for H2 2019. We expect Nvidia to lose significant market share and miss its guidance for H2.
On the CPU front, AMD continues to pull away from Intel. Unlike Nvidia, Intel has already reset growth expectations, but we expect the company to underperform even the mild investor growth expectations.
Thanks to these strides in CPUs and GPUs, we expect AMD product, market share, revenue, profitability, and stock price momentum to continue.
Our View of AMD: Strong Buy
Our View of NVDA: Sell Short
Our View of INTC: Sell
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Disclosure: I am/we are long AMD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Short NVDA
Any positions disclosed by the Author are part of a diversified portfolio. Author considers lack of diversification to be one of the most grave errors made by many investors.
Shorting is a sophisticated investment strategy that requires superior investment skills and must be avoided by all but experienced investors with the appropriate skill and wherewithal.