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AMD Revenue: It is about trade war and bleeding market share from Intel

Now that shares in Advanced Micro Devices Inc. have fallen back to the ground, something will enable investors to determine…

Now that shares in Advanced Micro Devices Inc. have fallen back to the ground, something will enable investors to determine whether the current trade war climate had affected the chipmakers ability to capitalize their competitors’ accidents.

AMD

AMD, -11.12%

is scheduled to report earnings after the market closed Wednesday.

AMD’s stock reached its peak for the year in September after AMD launched its Radeon Pro V340 server card at the end of August and a series of price upgrades from analysts and has since been corrected.

In a recent Morgan Stanley survey of chip distributors, the insurance company warned investors that the chip sector was “out of the woods”, as 60% of respondents surveyed said that the latest tariff uncertainty had an impact on order development and 44% said it had affected customers’ orders and stock behavior.

Customs against China in the ongoing trade war could harm American technology companies, and some companies have already issued warnings and taken precautionary measures.

During the quarter, however, one of the dominant themes of AMD has been how much market share is the company bleeding away from a scary Intel Corp.

INTC, -2.1

6%

Read: AMD vs. Intel: The chip maker seems to shift

“To us is the key issue: is the company trading on short-term Sept / Dec -18 expectations, or are investors continuing to look forward to 2020/2021 (driven mainly by AMD’s potential market shares against INTC in computers / servers) as the barometer for valuation AMD? “Asked Deutsche Bank analyst Ross Seymore in a listing.

Seymore, which has a rating and a price of $ 23, believes that the “goodness” of AMD is already backed by the stock price and that headlines in the warehouse ignore potential competition responses from Intel and Nvidia Corp.

Result: Of the 28 analysts investigated by FactSet, AMD is expected to average an adjusted earnings of 12 cents per share, down from the 13 cents a share is expected at the beginning of the quarter. AMD reported a profit of 10 cents per share over the period since. Estimate, a software platform that uses crowdsourcing from hedge fund managers, brokerage firms, purchase analysts and others, requires income of 15 cents per share.

Revenue: Wall Street expects $ 1.7 billion from AMD, according to 27 analysts pointed out by Fetset. It is below the $ 1.76 billion forecast at the beginning of the quarter. AMD, which reported revenue of $ 1.64 billion during the period, predicted sales of $ 1.65 billion to $ 1.75 billion for the third quarter. Calculate expected revenue of $ 1.75 billion.

For the quarter, analysts expect $ 1.05 billion in data processing and graphics sales, or 29% earnings from the previous year, down 21% of the company’s in-house and semi-sales sales to $ 653 million.

Share Watch: AMD shares have been on a volatile roller coaster after the company reported its best seven-year performance in the previous report, which peaked in a twelve-year-old 34, $ 14 in mid-September, capping an impressive five months, 200% increase, and then falling more than 30% to current levels. AMD’s stock is still the best current artist on the S & P 500 with 130% profit and has been the second most active stock market on the index in the last 52 weeks. Unlike the S & P 500

SPX, -0.04%

is up 3.5% for the year, the technical heavy Nasdaq Composite Index

COMP, -0.48%

is 7.9% and PHLX Semiconductor Index

SOX, -1.55%

is down 2.2%.

What analysts say: Of the 33 analysts covering AMD, 13 have bought or overweight, 15 have grades and five have sales or underweight, with an average price target of $ 25.25.

Cowen analyst Matthew Ramsay, who has an outstanding rating and $ 33 on AMD, said that AMD would “partially fill the gap” left by Intel 14nm Central Unit or CPU, shortage in the fourth and first quarter and using 7nm products for to capture long-term market share in the latter half of 2019 and 2020.

“7nm” and “10nm” – where “nm” means nanometer – refers to how small a chip maker can make the transistors running on a computer circuit with the general rule that smaller transistors are faster and more effective when using power.

Ramsay said:

Our industry conversations reveal four primary drivers for OEM frustrations, which leads to increased susceptibility to AMD alternative SKU: 1) Capacity shortage of PC market power in an increasingly rare age and Intel’s unwillingness to spend capex in order to significantly increase supply; 2) Continued pricing and SKU rigidity despite capacity problems. 3) Reduced marketing support from Intel to its partners with the decommissioning of large parts of the Intel Inside co-marketing program; and 4) the strong reminder of the PC ecosystem where these customers rank in Intel’s Investment Priority List (ie behind the big 7 Cloud Titans and behind Apple).

Ramsay believes that AMD is “deeply engaged” with five out of seven data center players. These include Tencent

0700, + 0.36%

who already made an announcement, Amazon

AMZN, -0.38%

and Google

GOOG, + 0.78%

GOOGL, + 0.66%

as Ramsay says he expects messages from soon and Microsoft

MSFT, + 0.15%

and Baidu

BIDU, + 0.02%

Stiff analyst Kevin Cassidy, who has a purchase price of AMD and a price of $ 38, said he expects AMD to use the conference call to report on 7 nm graphics processing devices or GPU and CPU products, an expansion of gross margins and the possibility of increased market share in the PC market.

“We expect AMD to continue to reach market share until 2019, as the chips will be fully qualified while the company will also benefit from the ramp in its second-generation chips, 7nm” Rome, “said Cassidy.” AMD plans to start its 7nm GPU in 4Q18 specifically aimed at the data center market, which we expect will be followed by a PC model 2019. “

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