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Yet, this is starting to change. After taking the helm in 2014, AMD President Lisa Su set the course for catching up with these biggest rivals. She decided to ignore the 10-nanometer node of AMD's chip portfolio and move directly to 7 nanometers. This decision, taken a few years ago, catapulted AMD ahead of Intel this year in the 7-nanometer processor race for PCs, desktops and data centers.
<p clbad = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Nevertheless, the recent report on the benefits of AMD does not shows that a whopping $ 0.08 in noGAAP (adjusted) earnings per share (EPS). In addition, the company lowered its forecasts for the whole year, which has been impacted by the trade war with China and by the decline of the current gaming console cycle. "data-reactid =" 13 "> Nevertheless, the latest report on AMD's results showed only a paltry $ 0.08 per share non-GAAP adjusted (EPS) share. In addition, the company lowered its full-year guidance, which had been affected by the trade war with China and the decline in current cycle of the game console.
Of course, the valuation of AMD at $ 30 does not only predict this year's results, but its future in a few years. What could it look like?
A CPU-shaped opening in the ceiling of a dark room; the beams illuminate the blue light in the dark room.
Where will AMD be in 5 years? Source of the image: Getty Images.
Major markets targeted by AMD
AMD's current processors and GPUs serve the personal computing, gaming and data center markets. According to a recent presentation from the company, AMD estimates that the market for addressable computers will reach $ 30 billion in 2020; the "immersive" market, including gaming, augmented reality and virtual reality, will reach $ 15 billion; and the data center market is expected to reach $ 29 billion in processors and GPUs by 2021.
This represents a total addressable total market of $ 74 billion. Yet, the $ 5.875 billion business figure achieved by AMD over 12 months would account for only about 8% of this combined market. At the end of the first quarter, AMD held only about 2.9 percent of the processor market and 17 percent and 13 percent of the PC and PC processor markets, respectively. AMD also held about 22% of the discrete GPU market at the end of the first quarter, a gain over the previous quarter, but lower than the previous year when it reached the high 30% range at some point .
So, what part of these huge markets could AMD occupy?
7 nanos could give you 25%
The most important product for AMD could be its new 7nm EPYC "Rome" processor chips for data centers. The data center market, even though it is currently in a slowing period, seems on the brink of developing in the coming years, with the intensification of artificial intelligence and intelligence. Cloud computing.
<p clbad = "canvas-atom-text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In addition, AMD seems about to gain a lot of for example, AMD had an important role to play. recent customer wins of the leading cloud platform Amazon Web Services and Server Company Dell Technologies. In addition, there have been recent rumors that Alphabet perhaps consider switching from Intel-based servers to AMD-based servers using the recently released 7nm EPYC chips. "data-reactid =" 33 "> In addition, AMD seems poised to gain a lot of market share from Intel, the group in place.For example, AMD has recently achieved significant success with its customers through a leading cloud platform Amazon Web Services and Server Company Dell Technologies. In addition, there have been recent rumors that Alphabet may consider switching from Intel-based servers to AMD-based servers using the recently released 7nm EPYC chips.
During the recent phone conversation with badysts, Su said:
Compared to our first-generation EPYC processors, we have more than double the number of platforms in development with more partners. We also have four times as many corporate and cloud customers actively engaged in deployments before launch. As a result, Rome is on track to accelerate significantly faster than our first-generation EPYC processor.
<p clbad = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "While AMD only holds 2.9 % of the server market, management estimates that it can occupy 10% of the data center market by the end of 2020, with a longer term goal 25%. Processors account for the majority of this $ 29 billion data center chip market, and AMD already holds nearly 25% of the GPU market. As a result, if AMD could absorb 25% of all revenues, it could generate $ 7.25 billion in revenue alone in the data center market alone, 23% more than all products of the company in the last 12 months. "Data- reactid =" 37 "> While AMD currently holds only 2.9% of the server market, management believes it can occupy 10% of the data center market by the end of the year. 2020, with a long-term goal of 25% – processors are the majority – AMD already holds nearly 25% of the graphics processor market, which would enable it to earn $ 7.25 billion in revenues the data center market 23% more than all of the company's products in the last 12 months.
AMD will present its EPYC "Rome" chips at an event to be held Aug. 7. Interested investors should therefore stay tuned for more details on this important new product.
The PC and the games could also improve
<p clbad = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "AMD recently announced that it had also reached its goal wins in the new generation of game consoles for both Sony and Microsoft. It's important for AMD to retain customers because both platforms are ending their current console build. The current video game market is facing a decline of one year on the other because the old generation of gaming platforms is at the end of the cycle, so that the development of new systems in the coming years could result in a rebound of AMD's built-in custom chips. "Data- reactid =" 42 "> AMD recently announced the win for its customers in the new generation of game consoles for both Sony and Microsoft. It's important for AMD to retain customers because both platforms are ending their current console build. The current video game market is facing a downturn of one year on the other, because the old generation of gaming platforms is at the end of the cycle, so that the development of new systems in the coming years could result in a rebound of AMD's built-in custom chips.
<p clbad = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Of course, it is also possible that new games The platforms could take shares from these incumbents.But it's OK: AMD has the chance to win new customers, because the new generation of AMD's Radeon graphics chips has been chosen as Google's favorite graphics processor. stadiums cloud-based gaming system. Of course, it is also possible that new gaming platforms can take their share of these incumbent operators, but this does not matter: AMD has the chance to win its winnings. customers because the next generation of AMD graphics chips Radeon has been chosen as the preferred graphics processor of Google's Stadia cloud game system.
Bigger and better
Although AMD does not realize a lot of profits today, its market share is small and it has just taken a technological lead over Intel in several important and growing markets. In five years, the company could more than double its turnover with a significant expansion of its margins.
That being said, keep in mind that the market has already at least slightly reduced the stock price of AMD. Equities are trading at 136 times earnings in the last 12 months and 33 times futures, which already implies a lot of growth. Even so, recent AMD clients are making money, which means that he seems on track to justify his current market capitalization of $ 36 billion. In five years, it could be mentioned in the same breath as its competitors much larger, profitable and paying dividends.
<p clbad = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 47 "> More from The Motley Fool
<p clbad = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Suzanne Frey, an executive member of Alphabet, is a board member of The Motley Fool. Teresa Kersten, a LinkedIn employee, a subsidiary of Microsoft, is a board member of The Motley Fool. Billy Duberstein holds Alphabet (C shares), Amazon, Microsoft and NVIDIA shares. His clients may hold shares of the companies mentioned. The Motley Fool owns shares and recommends Alphabet (A actions), Alphabet (C shares), Amazon, Microsoft and NVIDIA. The Motley Fool owns shares of Intel and offers the following options: $ 50 short calls on Intel to September 2019 and $ 85 long calls to Microsoft on January 2021. The Motley Fool has a disclosure policy."data-reactid =" 55 ">John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Suzanne Frey, an executive member of Alphabet, is a board member of The Motley Fool. Teresa Kersten, a LinkedIn employee, a subsidiary of Microsoft, is a board member of The Motley Fool. Billy Duberstein owns shares in Alphabet (C shares), Amazon, Microsoft and NVIDIA. His clients may hold shares of the companies mentioned. The Motley Fool owns shares and recommends Alphabet (A actions), Alphabet (C shares), Amazon, Microsoft and NVIDIA. The Motley Fool owns shares of Intel and offers the following options: $ 50 short calls on Intel to September 2019 and $ 85 long calls to Microsoft on January 2021. The Motley Fool has a disclosure policy.
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