Summary
AMD demonstrates its ambitions to regain market share lost to NVIDIA in the GPU market at CES 2022.
CEO Dr. Lisa Su highlighted AMD had made significant investments to improve its demand/supply imbalance by H2’22.
We discuss why we think the company’s best days are just getting started following its launches at CES.
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Advanced Micro Devices, Inc. ( AMD ) demonstrated at the recent CES 2022 event why it continues to be as competitive as ever under renowned CEO Dr. Lisa Su. As Intel ( INTC ) “heralded” its entry into the discrete GPU (dGPU) market with its Arc Alchemist, it was also marked by an alleged delay on its actual launch date. Perhaps a theme that semiconductor investors may have become familiar with shouldn’t be too surprising.
In contrast, AMD is all fired up as 2022 promises to be even more exciting for the company. It has already wowed us at its recent data center event, which highlighted the launch of its EPYC Zen-4 Genoa (2022 launch) and its cloud-optimized Zen 4c Bergamo (H1’23 launch) processors. At CES, AMD excited us further with its “mainstream” GPU to broaden its gaming appeal, as well as its Ryzen upgrades for both its desktop and mobile segment.
Given the strong product launches and the architecture upgrades in 2022/23, we think AMD is poised for a highly robust multi-year competitiveness in its markets. Moreover, consensus estimates of topline growth could have significantly understated AMD’s incredible roadmap, given Dr. Lisa Su’s prior guidance. Therefore, we believe when AMD reports its Q4 earnings later this month, the stock could be re-rated again.
Moreover, the stock is also down about 20% from its recent all-time high (ATH). Therefore, we believe it’s an opportune time for investors to consider adding exposure to AMD stock. CES 2022 Promises More to an Exciting Year Ahead
One of the most notable launches at CES was AMD’s graphics card for the mainstream gaming market. Gamers had a frustrating year in 2021 over the sky-high ASPs and supply shortages over NVIDIA’s ( NVDA ) and AMD’s graphics cards. But with the launch of its entry-level GPU, AMD intends to address the broader gaming market and hopes to gain share against NVDA (who also launched its entry-level GPU). Discrete GPU shipment share worldwide. Data source: Jon Peddie Research
There’s little doubt that NVIDIA is the runaway leader in the PC dGPU segment with a shipment share of 83% in CQ3’21 . We believe that NVIDIA will likely continue to maintain its leadership. But we are assured that AMD is not ready to continue ceding share to NVIDIA and intends to compete against NVIDIA for avid gamers. The gamers market has proven to be highly resilient and sticky even though they dealt with sky-high ASPs throughout 2021. AMD’s Radeon RX 6000 was still selling at an average of 85% above MSRP at major German retailers as of 2 January.
But AMD is confident that we will observe lower prices as the year progresses. In addition, the company highlighted that it expects the supply/demand dynamics to improve in H2’22, which would benefit both the gaming community and the company. AMD CEO Dr. Lisa Su emphasized (edited): The overarching message for gamers is that we look at this as a portfolio. We want to support the full range of gamers . When does supply catch up? As we go into 2022, we have made very significant investments across the board to ensure that we can continue to ramp our supplies across CPUs and GPUs overall. My expectation is that things will get a bit better as we go through the year. But our goal is to get as much product as we can out there. The investments we’re making with our partners are there to ensure that we can continue to ramp supply across all product lines. ( VentureBeat ) We think it’s critical for readers to consider why AMD is moving down the value chain to compete in the entry-level GPU market. Keen investors should know that AMD has prioritized its supply for its data center EPYC processors as it gained tremendous traction against Intel in 2021. Capacity constraints at TSMC have necessitated AMD focusing its limited production for its higher value data center segment. Therefore, if AMD is ready to […]
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