Bank of America analyst Vivek Arya, who has a $160-a-share price target on AMD's (AMD) stock, and a price target of $47 a share on Intel (INTC), noted that AMD (AMD) is gaining market share in the high-end and commercial segments of the notebook market, and it's been able to raise prices. As customers respond to AMD's (AMD) products, the gap is now down to 5%, compared to between 20% and 30% over 2021' fourth quarter, despite Intel's (INTC) Alder Lake product.
Arya said in a research note that strong pricing and execution has helped AMD (AMD) drive its PC value share to 20%, and unit share by 22% in the first-quarter of 2022, "with value share reaching all-time highs."
Semiconductors have been in a shortage for more than two years, due to a number of factors, notably the Covid-19 pandemic, which has disrupted supply chains across the world.
Chip equipment makers, such as ASML (ASML), have talked about rising demand buoying the space for years, which makes the fact that AMD (AMD) has been able to increase its market share, even with shortages, that much more impressive.
And it's not just in the PC space where AMD (AMD) has made significant gains that could be difficult for Intel (INTC) to overcome anytime soon, it's also the server market, which Intel (INTC) has counted on for growth.
In the first-quarter, Arya noted that unit and average-selling price for server chips were "solid" on a year-over-year basis, but there was some sequential decline for the first time in over a year. Though some may be concerned that that is a sign of "peaking data center demand," when examining capital spending on the cloud, it's likely that the server market will remain healthy.
AMD (AMD) now has 16.5% of the value and 11.6% of the unit share in the server market, up 5.7% and 2.7% year-over-year, respectively.
The company isn't sitting on its laurels either, as its next-generation server chips are routinely beating offerings from Intel (INTC). This is best exemplified by the competition between Milan, which is the codename of AMD's EPYC 7003 series of high-performance microprocessors, and Intel's Ice Lake.
Milan is taking more than 30% of unit share compared to Intel's Ice Lake, which Arya called "interesting," given that there has been such a disparity between the two companies previously.
Longer-term, given the company's pricing and continued engagements with so-called hyperscalers, including its recent deal with Meta Platforms (FB), it's possible that AMD (AMD) could get to 35% of the value share, which could result in earnings of nearly $8 a share by 2024, compared to current estimates of $6.54 a share.
Arya added that AMD (AMD) has gained unit share in the server market for 12 consecutive quarters, and its market share is now the highest it has been in more than 10 years, with seemingly no signs of slowing down.
Assuming the PC and server markets continue to grow roughly 6% on a compound annual growth rate through 2024, it's likely that AMD (AMD) could have a unit and value share of the combined market of 26% and 26%, compared to 19% and 15% in 2021, Arya explained.
Earlier this week, Citi said AMD (AMD) and Intel (INTC) could be impacted by a weakened PC market, as notebook shipments came in below estimates for the fourth month in a row.