How AMD’s Value Can Jump 25% By 2019 If EPYC Processors Capture 10% Server Market From Intel

AMD’s Value Can Go Up 25% By 2019 If EPYC Processors Capture 10% Server Market

AMD’s Value Can Go Up 25% By 2019 If EPYC Processors Capture 10% Server Market credit by AMD

AMD EPYC is becoming one of the most epic moves by AMD in 2017. To capture datacenter market from the dominant Intel products like Xeon CPUs is one of the hardest things to accomplish. Forbs recently did a review on how the Epyc CPUs are changing AMD value after the SC17 by getting a lot of attention and attracting new costumers. By all the improvements that AMD has made to its product lines in the last few years, its stock remains risky, considering its relatively low and fluctuating margins right now despite all the estimates and good or bad news that come out every day. AMD launched EPYC line of server processors earlier 2017 to compete with Intel. Main reviews from giant tech companies have been positive, and this could be the opportunity for AMD to grab some share and give a boost to its valuation. But how effective can it be for AMD to push the dataserver techs? Forbs shows how AMD can add 25% to its value by expanding in the server market. Forbs price estimate for AMD stands at $10, implying a slight premium to the market price. AMD’s Value Can Jump 25% By 2019 If EPYC Processors Capture 10% Server Market Share

AMD’s Value Can Jump 25% By 2019 If EPYC Processors Capture 10% Server Market

AMD’s Value Can Jump 25% By 2019 If EPYC Processors Capture 10% Server Market

If AMD gains a 10% share of the whole server CPUs market ‘(this is not including the GPU market by Instinct GPUs competing VOlta based graphics), it would achieve about 25% upside to its EPS, which can drive a similar upside to Forbs price estimate (assuming the valuation multiples remain constant).

But how can EPYC server processors gain that market share? Many believe that AMD can benefit from the fact that EPYC chips’ are being offered in lower cost and more energy efficient that makes them less costly for the consumers over time (which is a factor in servers and datacenters and the energy bills are huge in 24/7 high work load systems), and simplification of the future development roadmap and the performance per watt is attractive and the company has seen some good traction lately. How 10% Market Share Gain Can Lead To 25% Increase In EPS

AMD’s Value Can Jump 25% By 2019 If EPYC Processors Capture 10% Server MarketAMD’s Value Can Jump 25% By 2019 If EPYC Processors Capture 10% Server Market

AMD’s Value Can Jump 25% By 2019 If EPYC Processors Capture 10% Server Market

Forbs goes further and estimates the global server CPU shipments in 2019 to reach 26 million, meaning a 10% market share gain will imply 2.6 million server CPUs shipped. Therefore, the incremental server revenue will be roughly $1.4 billion ($550 for  average processor pricing in server industry). This push, would increase AMD’s EBITDA by $250 million (18% EBITDA margin) and lead to incremental earnings of $160 million, or 17 cents per share. This, in turn, would imply a 25% jump in EPS in 2019.

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Tags: Technology, amd, amd stocks, amd value, amd epyc, amd ai, amd epyc cpus, amd vs intel, amd market share, intel

Mohsen Daemi
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