Intel, AMD benefit from 'unexpected' PC revival - BofA

• Intel (NASDAQ:INTC) and AMD (NASDAQ:AMD) are the top two beneficiaries of the "unexpected PC market revival/stability," says BofA analyst Vivek Arya.
• Despite Intel's continued efforts to increase data center in its product mix, PCs still account for about 50% of sales and 60% of profits.
• Intel started the year with PC supply constraints. BofA estimates that Intel's PC CPUs grew 7% in H1, outpacing PC production by 500 bps and suggesting progress in replenishing the channel for a strong Q3.
• BofA sees Street estimates for Intel's H2 as too conservative, especially with the impending launch of next-gen 10nm Tiger Lake processors.
• The firm calls Apple's transition to in-house silicon a "modest headwind" for Intel.
• AMD held just 18% of the PC market in Q1, but BofA notes that the fourth-generation Ryzen desktop processors due in H2 positions the company to "extend its performance lead."
• BofA maintains Buy ratings on Intel and AMD with price objectives of $70 and $65, respectively.
• Related: Last week, IDC reported that Q2 traditional PC shipments were up 11% Y/Y globally.

Comments

[Dex4Sure]

Analysts are clueless as usual. They've been predicting the death of PC for the last 10 years.

[Mike Bruzzone]

I was the first to point out back in the first quarter second half PC sales would be block buster, on a channel flush with cash for reinvestment, when the professional analyst community was seriously in doubt.

Most recent blog observations here;

seekingalpha.com/...

What's driving the sales momentum however is not new system procurement but back in time system procurement, used / reclaimed / refurbished, generating a lot of cash for the channel to determine what next in among the "new" categories is inventory for resale worthy.

The answer has a lot to do with mitigating inventory holding financial risk on "new" that truly offers useful 'life time' utility value on performance stretch.

Mike Bruzzone, Camp Marketing

[RonAFGreve]

I wonder how much of this 'unexpected revival' is actually due to AMD chips. I held of buying a new PC for more than 10 years because the last intel based I put together, hardly was any faster than the previous I had. Recently I assembled a new one with an AMD 3950x and there is a huge improvement in speed.

[moo101times]

Identical situation. 2600k -> Ryzen 3950x as Intel kept respinning the same cpu. Not looked back.

[roosterBDA]

Good call Brandy. Definitely exclude Micron like you're instructed to do.

[kscopes]

@roosterBDA, That's OK. Any news, good or bad, would = bad news for MU so best for MU to stay under the radar.....Oh, I forgot, no news = bad news for MU....Dang.

[Sameer Advani]

Unexpected? By bofa maybe, not by investors. As usual, analysts like to tell us what we already knew.

[RandomSchmoe]

Apple's switch to custom ARM chips is significant. As well as cheap Chromebooks. Consumer electronics are slowly moving away from Intel. Luckily for Intel they still dominate the server and corporate environments.

[GaryBG]

@RandomSchmoe I’d think Intel has to choose the more profitable chips in which to compete for their capacity utilization. Gaming? Not so much.

[locum2]

@RandomSchmoe, I think Apple’s hype about changing a component shows they have run out of new product ideas. It’s effect on Intel is minimal. According to reports in Semi Engineering, Apple is purchasing equipment to accommodate 3,700 wafer starts per month. Not very significant.

[grxbstrd]

NVDA will obviously benefit from more PC shipments as well. But Vivek is probably holding that back for the week of NVDA earnings. . .

[stockroach]

@grxbstrd - NVDA will not only benefit from PC sales but I expect Intel to have a great DC number, that will be great news for NVDA. I have been going to cash sold all my MSFT all my NVDA at $350-$360 and 1/2 my Intel.
I will get back in if there is a correction, or the market keeps going and I miss out on additional gains.

Good Luck

[grxbstrd]

@stockroach "I expect Intel to have a great DC number, that will be great news for NVDA"

Agree with your sentiment, didn't they forecast 20%+ Q/Q or something?

With you on cash to a smaller extent. My sense is some tech companies are going to do well even if there is a big pull back in the broader market.

Sounds like you did well on NVDA, but hearing some talk about $5-$600 PTs (hell $300 exceeded my expectations from a few years ago). We'll see how it all shakes out. Def a holding stock for the next 5+ yrs imho

[stockroach]

@grxbstrd - "Agree with your sentiment, didn't they forecast 20%+ Q/Q or something?" Yes I believe that is correct. There is also some tail wind with PC in Q2 quarter. Tiger Lake ships in Q3 so that is a tailwind for Intel.

"My sense is some tech companies are going to do well even if there is a big pull back in the broader market." Agreed, I am hoping to get back in at a lower point for both. If it does not happen oh well.

"Sounds like you did well on NVDA, but hearing some talk about $5-$600 PTs (hell $300 exceeded my expectations from a few years ago). We'll see how it all shakes out. Def a holding stock for the next 5+ yrs imho" Yes I did, many thanks to you. Reading your posts has been very helpful.

[Chris Lau]

$AMD PT $70. Console refresh in Q4 will send it higher.
$INTC PT $70 because it's what businesses buy first. I don't care what AMD fans say, AMD is for DIY, Intel gets pitched first.
It's a tie.

[abdulmoiz1254]

@Chris Lau
No one even knows AMD in the gulf region or the indo Pak region or tries to even consider the idea or do a cost/benefit

I tried to play the devil's advocate with my IT manager friend, and asked me why don't we buy AMD systems ever (who is pretty damn qualified, and has been published by ACM Research and attended the last "closer" event in Greece) he gave a 3 hour explanation but I heard none as I dosed off pretty soon ..he was using words like hyperthreading and architecture and BS

In the end he just said AMD ain't good ...only 2 things matter Intel and VMware

[Technie]

He is just lazy and afraid the potential unknown software issues. His company will be benefit from the switch but he got nothing out of it and can get into trouble if running into issue. No incentive for him to do the work if he is not forced to from upper management.

[abdulmoiz1254]

@Technie
That is the problem ...he is crazy about work, and lazy is the last word one can use for him
He had no reason to explain elaborately to me why Intel makes sense (and put me to sleep)

He gets on my nerves a lot because of his constant attempt to save every dollar of the company ..telling me to use Citrix instead of the "RDP production server" to access MS Dynamics (I don't listen obviously as my weakness is speed and Citrix is slow as fuck)

I think the problem comes down to marketing ..and Intels dominance for the past decade has left a lasting impression on people to consider the hot alternate

His name is Naveed Khan ..he sits next to me so if you have any queries or material that could change his mind ..let me know

dl.acm.org/...

[billrla]

We have all been forced back to working on our computers rather than sitting in time-wasting meetings and seminars. I have been using MS Office more in the past four months than I had been using it years, because I need to write and edit more Word docs and create and edit more Excel spreadsheets. Also, I find that I need to spend more time on my PCs to get work done (docs and speadsheets, Quickbooks, file management), rather than on my Mac, which I use mostly to consume content, to build and edit web sites, work with photos, and do Facetime and Zoom. Said another way, I use my PC for words and numbers and my Mac for graphics.