Advanced Micro Devices Upgraded on Intel 'Strategic Faux Pas'

AMD was upgraded to outperform from market perform at Northland Capital Markets.
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Shares of chipmaker Advanced Micro Devices  (AMD) - Get Report were lower on Thursday even after they were upgraded to outperform from market perform at Northland Capital Markets.

The investment firm expects the Santa Clara, Calif., company to continue to gain market share after rival Intel  (INTC) - Get Report "made a strategic faux pas." 

This referred to Intel saying earlier this week that it planned to start offering foundry services, while also producing some of its own chips and outsourcing others. 

Intel will be competing with Taiwan Semiconductor Manufacturing's foundry business  (TSM) - Get Report while also outsourcing some of its own products to the company.

That could make Intel "persona non grata" at TSMC, according to Northland analyst Gus Richard. 

Intel’s "commitment to reentry into the foundry market and maintain leading-edge manufacturing capacity makes it a low priority at TSMC," Richard said, according to Dow Jones. 

"AMD and [Xilinx  (XLNX) - Get Report] on the other hand are TSMC preferred customers as all their leading-edge volume is produced at TSMC and the more they win the more business TSMC wins.”

Earlier this week, Intel said it expected to exceed earlier guidance for first-quarter revenue and earnings and said it planned to invest $20 billion in two new Arizona factories.

The company said strong notebook demand is driving the updated forecast.

On Jan. 21 the company offered first-quarter guidance for GAAP revenue of $18.6 billion and earnings per share of $1.03. 

It offered first-quarter guidance for non-GAAP revenue of $17.5 billion and EPS of $1.10.

Advanced Micro Devices shares at last check were down 0.4% at $76.21 while Intel shares were down 0.5% at $61.71.