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In the wake of the announcement, Analyst Kevin Cassidy lowers his rating on Intel to hold from buy.The statement came as an opportunity for AMD to increase its market share in the PC space, noting the company “now has a full line-up of PC CPUs.” said Cassidy.
Stifel, a well-known Stock investment company has taken a bold step by holding the stock from buy after concluding server chip sales are about to slow, and you should instead buy stock in Advanced Micro Devices (AMD), which they simultaneously upgrade to Buy from Hold.
“While we may be early on this, we believe the upgrade cycle may peak in 2H18,” Cassidy says in a note.
The decision came into consideration after a complete analysis of the market in the current scenario noting the company could face pressure as the upgrading cycle in its computer-server business peaks enforcing Stifel lowering its rating for Intel.
“We have been bullish on Intel for this upgrade cycle,” he writes of those Xeon server-chip sales. “We now believe the upgrade cycle could peak in 2H18 while longer term the company could face challenges from evolving data center architectures.”
Cassidy emphasized on spending time with the long terms risks to Intel and advantages for AMD.The first one is ‘Accelerators’ where server computing is way ahead in comparison to Intel’s microprocessors.
In our view, accelerators are becoming increasingly important as Moore’s Law improvements for CPUs have slowed. In March, IDC increased its forecast for total accelerated server infrastructure revenue to grow at a CAGR of 31.6% from 2017 – 2022 compared to the previous forecast of a 21.9% CAGR from 2016 – 2021. In November’s Top500 List of Supercomputers, the total number of accelerated systems increased to 104 from 90 in June, a 15.5% increase in six months. In that time, the number of accelerated supercomputers that used Intel Xeon Phi decreased to 10 from 14 in June. We believe this could be a reflection of customers resistant to being too reliant on Intel products. As accelerators compete for emergent AI opportunities, we expect this could push customers to solutions including GPUs from Nvidia or AMD, FPGAs from Xilinx, or new architectures being developed by Cambricon or Graphcore and away from Intel’s Xeon Phi or FPGAs.
AMD rose 2.9 percent Thursday to $10.07, nearly 30 percent below Stifel’s price target of $13 a share.
More here:- CNBC