AMD's Servers, Notebooks Growth Make it Worth a Look

NEW YORK (Trefis) -- AMD (AMD) is a semiconductor design innovator and manufacturer of microprocessors used in servers, desktop PCs, and notebooks. The company offers a vivid digital experience with its groundbreaking AMD Accelerated Processing Units (APUs) that power a wide range of computing devices.

Its server computing products are focused on driving industry-leading cloud computing and virtualization environments and its superior graphics technologies are found in a variety of solutions ranging from game consoles and PCs to supercomputers.

AMD faces competition from PC microprocessor maker Intel (INTC) as well as mobile chip companies including Nvidia (NVDA)and Qualcomm (QCOM).

See our complete analysis for AMD.

Amidst tough industry conditions in 2010 led by an uncertain economic environment and hard disk drive shortage, the company also faced some internal difficulties in vacuum and manufacturing issues, which further suppressed supplies.

As a result, the company witnessed a tough year with eroding investor confidence. In the past year the stock declined by almost 13%, reaching a low of $4.30 in October 2011.

Here we discuss some factors that support our current price estimate of $8.40 as well as potential risks that could lead to a downside in the same.

Increasing Share in the Server Market

Having lost almost half its market share since 2007, we feel that AMD has reached a bottom and hereon will see a year-over-year increase in its server market share, almost doubling from the current level of 5.5% to 12.5% by the end of our forecast period.

Driven by mega data centers and the explosion of client devices such as smartphones and tablets accessing web content, the worldwide server market is expected to grow at an average rate of 7% in the coming years.

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