Due to a 15% month-on-month increase in laptop shipments in August, Citi maintained $Advanced Micro Devices (AMD.US)$ Buy rating. Additionally, Citi also pointed out that because of AMD's AI chips compared $NVIDIA (NVDA.US)$ Competitors are cheaper, and the company is gaining more share in this area.
However, the 15% month-on-month increase was more a reflection of weak demand recorded in July than a substantial increase in the market. City analyst Carrie Liu predicts that the third quarter of 2024 will see a 4% month-on-month increase in laptop demand, below the 5% average. Citi's forecast for 2024 PC sales is 0.256 billion units, up 1% year over year, in line with pre-pandemic levels.
Citi analyst Christopher Danely said in a report: “We believe that the recovery of personal computers seems weaker than expected after conversations with Intel (INTC.US), Dell (DELL.US), and Western Digital (WDC.US) last week. We believe that PC inventory replenishment is over, and there may be mild headwinds in the short term.” Citi also maintains Intel's “neutral” rating, and the PC and server business accounts for about 80% of Intel's sales.
However, AMD is trying to seize a larger share of the server chip market currently dominated by Nvidia (NVDA.US). Nvidia's chips are highly regarded by cloud computing companies, but the high cost has prompted many vendors to also use AMD chips to enhance their data centers.
For example, according to a Wednesday article from The Information, an Oracle (ORCL.US) executive said that some of the company's cloud customers are using AMD's chips to provide inference for artificial intelligence. On Monday, the CEO of Amazon's cloud business division AWS said that the company's cloud services not only provide customers with AMD chips, but also Intel, Nvidia, and AWS chips.
Although AMD's chips aren't as powerful as Nvidia's, they're more affordable. However, they still have a long way to go to catch up with Nvidia in the data center space. In the latest quarterly financial report, AMD's data center revenue was $2.8 billion, while Nvidia's data center revenue was $26.3 billion.
However, AMD is taking action, and last month it announced the acquisition of ZT Systems, which will further enhance its ability to provide infrastructure for hyperscale computers.