Advanced Micro Devices, Inc. (NYSE:AMD), Intel Corporation (NASDAQ:INTC) – AMD Expected To Draw Strength From Intel’s Weaknesses, Gaming Console Chips

Superior Micro Units, Inc. (NASDAQ: AMD) is on faucet to launch its third-quarter earnings report Tuesday after the market closes. The report assumes significance, as rival chipmaker Intel Company (NASDAQ: INTC) turned in a disappointing quarterly performance.

Q1 Expectations: Santa Clara, California-based AMD is anticipated to report earnings per share of 35 cents. The chipmaker’s revenues are estimated to come back in at $2.56 billion.

A 12 months in the past, the corporate reported EPS of 35 cents on revenues of $1.8 billion.

A Modest Beat? AMD is primed for a modest third-quarter beat, aided partially by extra favorable knowledge middle demand combine, BofA analyst Vivek Arya mentioned. Versus Intel,the enterprise phase, which softened, accounts for merely 20% of AMD server gross sales.

Intel’s modest 1% year-over-year development in PC chips regardless of IDC’s forecast for PC unit shipments growing 15% within the third quarter is a pointer to AMD’s share beneficial properties on the expense of Intel, Arya famous.

“Certainly, our Steam survey tracker has proven AMD’s share in CPUs for PC gaming rising steadily during the last a number of months to latest 26% peak,” Arya wrote within the word.

PC combine towards client from enterprise can also be favorable for AMD. Moreover, BofA expects semi-custom demand to be strong following very profitable launches of each the PlayStation 5 and Xbox X recreation consoles. The agency estimates over $650 million in revenues from the phase, premised on unit gross sales of 6.5 million at $100-$110 ASP.

The largest constraint to upside, in response to BofA, will possible be extra resulting from capability constraints at Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) slightly than a requirement concern.

Associated Hyperlink: AMD’s Interest In Xilinx ‘Strategic’: Here’s Why

This fall Steerage: The two%-3% sequential development implied by the fourth-quarter consensus estimate is achievable, given new product ramp in desktops and servers, BofA mentioned. The consensus estimates for the fourth quarter name for EPS of 39 cents and revenues of $2.62 billion.

The launch of Intel’s new 10SF Tiger Lake pocket book processors will boost competitors within the pocket book phase, Arya mentioned.

AMD’s PC combine/ASPs will possible maintain up higher partly resulting from gaming combine and restricted participation in Chromebooks. Arya additionally sees semi-custom enterprise dealing with more durable comps within the fourth quarter.

With combine shifting away from semi-custom, general gross margins are anticipated to develop 200 foundation factors to 46% within the fourth quarter, BofA mentioned.

Key Areas: Readability on AMD’s M&A method, particularly any phrase on the speculated Xilinx, Inc. (NASDAQ: XLNX) deal, and subdued gross margins, given the upper mixture of consoles, are amongst issues traders can be eager to know, BofA mentioned.

AMD’s Inventory: AMD’s shares are up about 80% year-to-date, and within the third quarter, the inventory rose about 56%. The inventory closed Monday at $82.23. 

BofA has a Purchase ranking and $100 worth goal for AMD.