Text size

Rosenblatt Securities’s Hans Mosesmann today reiterates a Buy rating on shares of Advanced Micro Devices (AMD), and a $20 price target, writing that a “high-level view is in order” of the company’s battle with Intel (INTC) for server chips.

In tones dripping with sarcasm, Mosesmann refers to Tuesday’s unveiling of details of AMD’s “Epyc” server chip, and chides his colleagues on the Street for “denying reality” by failing to give AMD credit for what it’s accomplished.

"Firstly, the amusing consensus view the day after the EPYC launch on the 20th is that it is a solid product (enough to gain some incremental share), and that only time can tell how it all plays out as Intel (INTC: Sell) responds."

"Very value add,” quips Mosesmann.

"The positioning of this narrative requires a substantial intellectual effort to deny reality after a multitude of PC OEM, server OEM, hyperscale player sup- port for EPYC/Ryzen."

Mosesmann writes that Intel’s server-chip roadmap has “been caught by surprise,” while the company was pre-occupied with Nvidia (NVDA), its “existential enemy.” Further, with Intel’s “process road map” being “not inspiring,” Mosesmann predicts Intel will have cut prices, arguing “there is not competitive response we see from Intel that won’t destroy” its “historical pricing model."

Mosesmann thinks the Street — specially his sell-side colleagues — are “refusing to connect the dots between market share and dollars,” and that the company can probably do even better in market share against Intel than they did the last time they had strong product, back in 2006:

For us the issue in this AMD vs. Intel x86 battle is not that AMD can capture 10% of the market (perhaps what is starting to be seen in current share price move), or not even mid-to-high teens share which history suggests is a given when AMD reappears onto the x86 scene. No, the issue for us is why won’t AMD achieve more than the 25% share (18%-20% dollar share) seen in 2006 when AMD had merely integrated a memory controller function onto the CPU, which was a rather simple move that merely caught Intel off guard for a few quarters. An 18%-20% dollar share in a market that is say $45 billion (server, notebook, and desktop), is ~$9 billion that is a great opportunity for AMD to say the least.

AMD shares today are down 17 cents, or 1%, at $14.21.