AMD Continues to Encroach on Intel's Market Share
Advanced Micro Devices Inc. (NASDAQ:AMD) has been eating into Intel Corp.'s (NASDAQ:INTC) market share for years, and the trend shows no signs of slowing down. The company's x86 CPU market share has risen to an all-time high of approximately 28%, while Intel's share dropped to 73.7% in the second quarter. While Intel still dominates the overall CPU market, it is clear that AMD is becoming a thorn in its side; one it cannot afford to ignore for too long. This is good news for consumers, as it will likely result in lower prices and more innovation from both companies.
Looking ahead, AMD's new Ryzen 7000 processor series should get a larger piece of the pie in the industry. The stock is trading at a low price due to high inflation. As the semiconductor industry is important to modern economies and AMD is unlikely to lose ground in this sector, it makes for a poor short-term investment but a great long-term one.
Ryzen processors are the next big thing
Earlier this week, AMD revealed its new Ryzen 7000 series of desktop processors, coming in at a competitive price point and built with an optimized design for gamers. The company also announced plans to release more high-end models later this year, providing even better performance.
The company will release the newest series of processors in late September. The range has a 29% performance improvement over the Ryzen 5000 series.
AMD's latest processors have a small die size, resulting in higher computing power and lower energy consumption. The series also has a 5-nanometer manufacturing process, which is more power efficient and faster than the 10-nanometer manufacturing process used by Intel in the Raptor Lake series.
Data centers and embedded segment business look great
Data centers are the backbone of the modern economy, and their importance is only growing as we become more reliant on cloud computing and the internet of things. Data centers house the servers that power our email, social media, online banking and more.
It is great news for AMD as the company is a major supplier of processors for data centers. Every country's data center market is constantly growing, and AMD is well-positioned to benefit from this trend. According to a Research and Markets report, the U.S. data center market alone is forecasted to reach $69 billion by 2024.
AMD's second-quarter data center business was a standout performer, with revenue growth spiking to over 83% versus the year-ago period, primarily due to fantastic demand from cloud and enterprise customers. The company's data center products are well-positioned to continue delivering strong growth in the future as it has made significant market share gains across many important segments.
The company also recently acquired Pensando Systems for $1.9 billion. Pesando will add to AMD's data center capabilities and help boost its revenue in the area. In addition, the company is continuing to invest in new product development, with several key launches scheduled for the second half of the year. As a result, AMD is well-positioned to continue driving strong revenue growth in the data center market.
Takeaway
While it is true that no company is immune to economic headwinds, some are in better shape than others. For example, AMD has a strong balance sheet with cash on hand and is benefiting from strong demand for its new Ryzen and Threadripper processors. As a result, while AMD is not immune to economic headwinds, it is better positioned than most to weather the storm.
This article first appeared on GuruFocus.
