AMD is ahead of the competition

Advanced Micro Devices (Nasdaq: AMD) shares a 30-day performance of -6.86%. I am still optimistic about AMD.

We now have a cheaper entry window. AMD stock is trading at a discount of 16.36% from its 52-week high of $ 122.49. (See Advanced Micro Devices Stock Charts on TipRanks)

AMD is a semiconductor company that sells x86 processors to consumers and data centers. The company also sells Radeon graphics processors. AMD has a license for ARM-based processors and can manufacture these itself.

Market share gains over Intel (NASDAQ: INTC)

Google's decision to use more EPYC processors is fueling AMD's growing market share in server processors. In the second quarter of 2021, AMD recorded a sales share of 11.6% with x86 server processors.

In the second quarter of 2020, AMD's market share for server processors was still 5.8%. Now it is 9.5%. For this reason, Intel (INTC) is lowering the prices for its server processors.

The increasing use of EPYC processors by Google (NASDAQ: GoogL) could boost AMD's TTM net income of $ 3.436 billion. According to a recent leak, AMD is charging $ 10,000 for its Milan X EPYC server processors.

Google Cloud ranks # 3 in the cloud infrastructure industry with $ 47 billion in quarterly revenue. Competitors to Google Cloud could also buy more AMD EPYC processors. Amazon (NASDAQ: AMZN), the number 1 cloud infrastructure provider, also leases AWS instances that use EPYC processors.

Windows 11 catalyst

Aside from the growth in servers, AMD's Ryzen brand has helped the company gain 17.1% market share in x86 desktop processors and 20% in laptop processors. The TPM 2.0 hardware security requirement of Windows 11 is therefore a catalyst for AMD.

There is a long list of Ryzen, Threadripper, and EPYC processors that are compatible with Windows 11. At the same time, the supply of processors is becoming increasingly scarce. Leading PC manufacturers such as HP, Inc. (NYSE: HPQ), Dell (DELL) and Lenovo (LNVGY (OTC: LNVGY)) will pay maximum prices for all available Windows 11-compatible Ryzen processors.

AMD's profit margin is already high at 25.80%. It can rise even further as PC manufacturers face a shortage of x86 processors.

Windows 11 will also drive sales of built-in and discrete Radeon RX graphics accelerator cards. Gamers who are forced to buy new PCs due to Windows 11 will likely also consider buying a new PC that already has a new graphics processor preinstalled on it.

Plus, Nvidia (NASDAQ: NVDA) still doesn't produce enough discrete GeForce GTX GPUs. At the same time, there is no report that AMD cannot produce enough Radeon GPUs.

AMD: Cheaper valuation metrics

AMD's stock is now cheaper than NVDA's. AMD has a TTM P / E rating of only 36.27. That's half what NVDA's 74.20. In addition, NVDA has no x86 processors for sale, only GPUs and ARM-based processors.

Additionally, AMD's Piotroski F score is 8, which means the company is very strong financially and represents excellent value. Nvidia's Piotroski score is only 5 and Intel's score is 6.

Additionally, AMD's total cash on hand is $ 3.79 billion. That's more than the company's total debt of $ 657 million.

Wall Street's opinion

Wall Street analysts' consensus is that AMD is a moderate buy based on 11 buy, 3 hold and 1 sell recommendation. The median target price for AMD is $ 116.21, which translates into an upside of 13.43%.

Conclusion

AMD's growing market share in x86 consumer and data center processors makes the company an investment that investors should consider.

Disclosure: At the time of publication, Motek Moyen had no position in any of the securities mentioned in this article.

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