4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 108
New Street Research has said in a latest report that the AI PC demand companies like Advanced Micro Devices, Inc. (NASDAQ:AMD) are counting on may not be that strong after all.
The report said that in the second quarter of 2024, PC shipments rose just 3% year-on-year. For the full year, PC shipments are now expected to remain flat compared to last year. Even with an upcoming PC refresh cycle, the International Data Corporation only forecasts a 5% increase in 2025.
“In notebooks, Advanced Micro Devices, Inc. (NASDAQ:AMD) gained 1pt of unit share with the continued ramp of Ryzen 7000-8000 (4nm), while Alder Lake (Intel 7) and older SKUs declined, as inventories built up during 1Q flushed, offsetting the Meteor Lake (Intel 4) ramp,” said New Street analysts, led by Pierre Ferragu. “Intel ASPs were down 2% QoQ vs. up 13% at AMD, resulting in Advanced Micro Devices, Inc. (NASDAQ:AMD) revenue share up 3pts.”
“Inventory movements could explain some of it, but the reality is that Intel is still losing share despite being back at the leading edge in notebooks.”
The report said most of the demand is driven by enterprise customers and consumer-related demand is slow.
New Street Research notes that inventories for PC CPUs are again high, and further increases could result in weaker demand heading into 2025.
The firm also sees little evidence of AI PCs driving demand higher. “The supply chain wants to believe in an AI-driven refresh cycle, but we see no evidence of it,” Ferragu said. “Gen AI will revolutionize the user experience for PCs and personal devices more broadly, but the revolution won’t be hardware-driven and won’t create a near-term product cycle, in our view. Killer use cases are still quite remote and will gain adoption through software.”
Despite this, New Street believes Advanced Micro Devices, Inc. (NASDAQ:AMD) is well-positioned to benefit from AI growth in 2025, particularly due to its MI300 GPU series.
Baron Technology Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global fabless semiconductor company focusing on high performance computing technology, software, and products including CPUs,9 GPUs, FPGAs,10 and others. Shares of AMD remain volatile, and after a strong run earlier in the year, the stock fell during the quarter as investors continue to wrestle with AMD’s competitive positioning in the AI compute market relative to NVIDIA, who continues to strengthen its full-system solution offerings at a rapid pace. AMD also updated its MI300 GPU chip revenue expectations for the full year to “greater than $4 billion” vs. prior $3.5 billion, which disappointed the market a bit relative to high expectations. Over the long-term, we believe AMD, with its unique chiplet-based architecture and open-source software ecosystem, will play a meaningful role in the rapidly growing AI compute market, where customers don’t want to be locked into a single vendor and AMD offers a compelling total-cost-of-ownership proposition, especially in inferencing workloads. Simultaneously, we believe AMD will continue to take share from Intel within traditional data center CPUs, which, while now a slower growth market, is likely to see a near-term refresh as data centers look for ways to improve energy efficiency and optimize existing footprints.”
