AMD jumps after upgrades, leading analysts to forecast Intel's gains

AMD shares jumped 10% on Tuesday after announcements about upcoming chips led analysts to predict that the company would gain market share from Intel.

On Sunday at Computex Industry in Taipei, AMD announced the release in July of several new third-generation Ryzen PC chips, which will use the company's core "Zen 2" technology. In a statement, AMD said that a Ryzen chip exceeded by more than 16% that of an Intel CPU.

Intel's shares fell about 2% on Tuesday, as US indices rose slightly.

"This announcement represents the first time that AMD has been using processor and desktop processor performance technologies in its 50 years of existence," said Stifel analysts led by Kevin Cassidy on Monday. the occasion of a closing of the American markets. Memorial day. "What's important for investors, we expect AMD to accelerate its PC market share gains through superior performance, lower power consumption, lower cost, and ease of use. level."

Stifel analysts, who are quoted on AMD shares, expect market share gains that will increase AMD's average selling price and result in a higher gross margin.

AMD has announced the release of new Radeon RX 5700 graphics processing units for gaming in July. GPUs will use a new architecture, Radeon DNA or RDNA. The presentation showed that a new Radeon card was working better than a card from his rival Nvidia. Lisa Su, CEO of AMD, said the next Sony PlayStation console would use a GPU based on RDNA technology, as well as a chip containing the "Zen 2" core.

Representatives from Intel and Nvidia did not immediately respond to requests for comment.

The new third-generation Epyc chips for servers using the "Zen 2" kernel will follow in the third quarter. At the show, AMD introduced a server running a new AMD silicon, surpassing an Intel server. Amazon and Microsoft both began offering AMD chips to third-party developers via their public clouds.

"The presentation reinforced our positive thesis on the history of AMD's sustainable product / action cycle gain that is looking at 2H2019," Aaron Rakers of Wells Fargo wrote Monday, which recommends the "best price". AMD stock purchase.

Analysts also pointed to the difficulties Intel faces in reaching the latest state-of-the-art chip manufacturing process.

Matthew Ramsay of Cowen said that with the AMD upgrades, Intel will no longer be able to count on its "silicon advantage, but will instead rely on its availability rate and its breadth in silicon, its 10-nm chips are expected only end of 2019 on PC and 2020 in the servers. "

Ramsay, who received an "outperforming" rating for AMD, said the company's product roadmap has improved significantly for 2019 and 2020.

WATCH: 2019, a "year of growth," says AMD's CEO